The stock market is largely fake. Fake, in the sense that little of the trading represents the buying and selling of investments and most of it is a computer game. Even the insiders are getting frustrated with the game-playing. Themis Trading, an institutional brokerage, provides an excellent blog and white paper which details the abuses that are going on.

In case you are not familiar with the subject, high frequency trading is the hottest thing in the equity market right now. Over 60% of equity volume comes from the high frequency traders (HFT). Basically, HFT’s are computers that execute trades with extremely low latency. They live in a world of milliseconds….

The high frequency trading business is extremely profitable. Based on the smugness and the smiles on the faces of the panel members, I could tell they were killing it.

The white paper lays out in detail the various strategies that are being used, which basically steal from investors, with not only the connivance, but the active participation of the exchanges. The SEC will doubtless catch up with this kind of technology somewhere around 2050. But, even then, they’ll just nod and wink. Boyz will be boyz.