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CFTC Commissioner Bart Chilton on HFT Regulations, Silver Manipulation Probe & MF Global

Capital Account
Wednesday, November 14th

Welcome to Capital Account. Yesterday the New York Stock Exchange suspended trading in 216 companies for most of the day, according to the FT. The trading suspension was due to a technical problem with a server; this is just one more report of an electronic trading glitch in the era of the Flash Crash, Knight Capital, and the botched Facebook IPO. We talk to CFTC Commissioner Bart Chilton about what should be done about algorithmic and high frequency trading, and why it has taken so long. We mention the work of Eric Hunsader and his team at Nanex, who saw significant improvements on the data side of markets following the Knight Capital debacle and a decline in HFT manipulation, that he attributes to a rare enforcement of regulations. We ask Bart Chilton if ENFORCEMENT is the issue, and not the creating of new regulations.

Plus the Wall Street Journal reports a federal jury cleared two former money-market mutual fund managers of fraud charges. How difficult is it to prove intent in these cases? We talk to Bart Chilton, author of "Ponzimonium," about how the law needs to change in order to make bringing fraud charges forward, easier. One of those things is the laws and wording around "intent," something that has made prosecution and regulation much more difficult. And one place that regulation is important is in preventing, or curtailing market manipulation, specifically the manipulation of the gold and silver market. There is much speculation about the role of large bullion banks in the gold and silver market, and how they may be using large, concentrated directional positions to affect the price. There has been an ongoing CFTC investigation that Bart Chilton hopes will provide some answers for the public soon.

And what about MF Global, and its former CEO, Jon Corzine? The former senator, governor, and CEO of Goldman Sachs is still walking around, seemingly worry free. We ask Bart Chilton about some of the suspicious information that has surfaced since those "chaotic final days" at MF Global, and if he thinks anything may come from this? After all, we have seen a major decline in volume on exchanges since MF Global and PFG Best, and events like these do not bode well for investor confidence.

Lastly, Congress returned to work today, and they have seven weeks left to avert the Fiscal Cliff. We are sick of the term, and last week we asked you to rename it on Facebook-- the response was overwhelming! Lauren reveals our top ten new names in today's "Loose Change."

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