Flash Orders

Capital markets exist for many reasons. A primary reason is to use "the wisdom of the crowd" to improve capital allocation.

We'll leave for another day why improving capital allocation is known, technically, as a good thing. And a good thing at all levels -- for your portfolio, for a business, and for a country's economy.

Markets are of course imperfect allocators. An asset bubble is an Exhibit A imperfection! Despire markets' imperfections, over the long haul they provide direction on improved capital allocation better than known alternatives. It's like the old saying about democracy.

We'll also leave for another day exposition on several policy reasons disfavoring so-called "flash orders." These reasons include notions that flash orders are a form of front-running or analogous to a game of cards in which one sees one's fellow players' hands.

For now, please return to the point of beginning: flash orders have very little to do with improving capital allocation.

Instead, flash orders have much to do with gamemanship. Perjoratively, gaming. And a "gamed system" is known, technically, as a bad thing.

Particularly disappointing is that the exchanges are involved in this bad thing.

Questions remain; hopefully developments in the weeks ahead will provide answers. How significant a contributor were flash order profits to recently announced investment bank earnings? And if the investment bank is a public company, how front-and-center is disclosure about the contribution in the bank's SEC filings? And why haven't others in Congress joined Senator Schumer?