On Tuesday of this week, The Wall Street Journal celebrated the 125th anniversary of the publication of its first edition. The last page of the special anniversary supplement to the July 8, 2014 edition contained an interesting piece by Jason Zweig, “The Past, Reimagined: How The Wall Street Journal of 2014 might have covered the news of July 8, 1889.”
The lead story on the cleverly “reimagined” front page is headlined “Telegraph Steps Up Trading Speed.” Also above the fold, among the “What’s News” briefs, is an item stating: “The NYSE will use its new telegraph subsidiary to sell trading data to brokers willing to pay a fee for the ability to see prices before customers can.”
The point, of course, is that technological advances, whether telegraph or fiber-optic cables capable of transmitting data in milliseconds, always provide a temporary advantage to those willing to pay for them. But that doesn’t necessarily create a fundamental unfairness.
On Monday, Bart Chilton, a former Commissioner of the Commodity Futures Trading Commission and now a Senior Policy Advisor at DLA Piper, wrote on The New York Times DealBook blog, “The real lesson of the recent, and deserved, attention to such trading is this: technology in modern markets is here, will not disappear and is providing significant benefits to institutional and retail investors.” The very title of his post is quite eloquent: “No Need to Demonize High-Frequency Trading.”
On June 20, SEC Chairwoman Mary Jo White stated succinctly: “Our markets are not broken and they are not static. In that sense, our work on market structure is never finished - the speed with which technology and markets change makes that impossible - instead, we must always be focused on what in our market structure can be improved for the benefit of investors and companies.”
In other words, regulation must sensibly evolve to protect users of our markets as those markets continually change to embrace technological advances. As suggested by The Wall Street Journal, this was as true 125 years ago as it is today.