anyway. good afternoon and welcome to prime interest i'm harry and boring here and washington d.c. and here's the stories that we're tracking today. you hear it first here on prime interest and we're calling it bloomberg gate is heating up like a scandalous break in at a washington hotel first goldman sachs complained it got wind that bloomberg reporters are trolling their logon records now we know at least one employee was keeping tabs on the none other ben bernanke you and him guy no word on how often the chairman checks the price of gold but in a related development more than ten thousand private messages sent from bloomberg terminals turned up on the web after a simple search. for the new york mayor's namesake from and we're just one week away from the most anticipated shareholder meeting of the year j.p.

morgan shareholders are raising questions about come over the details made between board members and their outside affiliates and we've been reporting jamie dimon himself is rumored to be on the chopping block he would however retain his c.e.o. title if you from the board finally we highlighted the hot i.p.o. market yesterday with a bullish or bearish reports that private equity groups that have been snapping up homes are going to flip them into rental property i.p.o. but they're doing it much sooner than anticipated says a blogger i've met normally i'd wait a few years it's a given investors the rental of the rental management unit is a viable business so is this a sign of market top. all right let's get into what's in your interest.

every day billions of shares are traded in the stock market all of the activity depends on knowing the prices at the moment you buy or sell so how does the information get out there and has it always been reliable today we're going to take a look into the fine print of stop quoting in the early one thousand nine hundred of the only way to receive prices was either word of mouth or handwritten messages since the useful life span of one stock quote was brief quotes didn't travel far outside of new york city now after the civil war the invention of the stock ticker

revolutionized wall street and tracking became excessive all to a wider geographic audience this allowed people across the us to access near real time stock prices and the trade on exchanges by the late one thousand nine hundred concerns over control on vital market data amounted western union it dominated the the market for quotation and financial news services and some were concerned that western union would use their access to the data to help insiders manipulate the market and a report to the house judiciary committee and eight hundred seventy five representative benjamin butler advocated the nationalization of telegraph services warning that there is no industry no interchange of commodity and no value that is not at its mercy however in eight hundred ninety s. we saw the end of western union's dominance in the quote market the new york stock exchange commonly referred to as an icy. secured control of the commercial telegram

company and renamed it the new york quotation company it became the exclusive ticker service on wall street reporting stock prices became increasingly difficult over the next century often the same company stock appeared on different exchanges and at different prices now congress recognized the need for an accurate centralized quote system so in one nine hundred seventy five the security and exchange commission was asked to help set up an oversee and nationalize market system with centralized quotes as part of the national market system the national best bid or offer also known as was created the rules require brokers to guarantee customers the best available price when they buy or sell securities for example if you placed an order for stock and the national stock network but the best price for that stock was on the boston stock exchange that the national stock network would route your order to the boston stock exchange so having this information up to date and in real time is very important while it becomes a challenge when the market is extremely volatile there's times when quotes can't

keep up with change it changes and prices in the minutes following the two thousand and ten flash crash and the video feed it would at times lag real changes by as much as twenty four seconds which is a lot of time considering stocks can be traded in thousands and even millions of a second the m.b. video was calculated by the consolidated tape association this is the central agency that collects all the trades as quotes from the exchanges and reports which are the numbers you see when you're looking at the ticker on time square now the security and history automation corp. is the operator of the consolidated tape and in two thousand and six nice he took over. and in a merger with your own meaning that nice see your own that i was the sole owner of the firms that provided security codes so once again they see the. new york stock exchange company. has regained exclusive ownership of the rights of the wall street

tech or was brings has to a full circle or things began over a century ago and that's what's in the fine print of stop quoting. senator ted kaufman spent part of his time in congress warning about high frequency trading. trading firms are currently locked in a technological orange race the result in some big disasters. and the dentally he made this warning just a few months before the crash in two thousand and ten producer bob inglis and i have a chance earlier today to speak with eric's got him sader is the founder of man x.

i first asked him if he agreed with senator kaufman characterization of the competition between exchanges and the firms as an arms race meaning that the two are continually having to up the ante in terms of bandwidth and speed and here is his response. there's not really. exchanges. trading there kind of. relationship. the arms race to going. is trying to it's almost a gentleman's agreement. he sounds you. to agree to a speed limit. and we kind of see this because every time the nicely does a capacity upgrade nature of two firms kind of spike the capacity when they just kind of push up against a glass ceiling but do they sometimes break it does that ever happen you know well when they. topete what happens is that he then gets to lead in. whatever symbols

are processed on that same on the same computer so computers will process certain stops and you know what they are out of the first letter of the star symbol is one of those star symbols gets delayed they all the whole group and is this something that happened was this a precursor to the flash crash itself and has this happened recently. well that what that is what was unique about the flash crash you need to look at all the other points of information and what really stood out as the need of the day was the messages rates hit the peak and stayed at the peak the last time we had a similar century of information wasn't sometimes we were ninety thousand in a cheery send out an ad stating the downturn struck five hundred points about ten minutes and then recovered. so it was important for information not to get too late

because the soon as there's all these machines are basing their intelligence of what to do on crisis and prices. curves in garbage out. and put something on with that they need really pull out immediately when it's in the blink of an eye on pull out right that's settled as soon as we had those delays on the saves you lost a whole group of liquid and we saw that kind of recently too when the twitter a.p. feed fiasco happened a couple weeks ago all this liquidity that was supposed to be there just vanished in an instant. yes that it's truly finding her since i've been doing this and i started back in eighty six i've never seen could it be this peter that fast and that greed of magnitude it was something to behold but we thought that one of the results of that of quote stopping can you explain what the broader facts are on the market and on individual stocks are of course stepping. right so we have the

opportunity to look at major firms trade actual trade data already data or we see sadly a long it takes to work in order and there are different stages of the order and what we found is when there are messages rates are high these are order times in the crowd a lot of crime on wall street will get behind hundreds of milliseconds it's pretty surprising when. doesn't take really that high of quote really to cause this more. time in are these are these smart border riders that you're talking about are these just are they trying to break up large trades for large institutional traders or the h. of t. firms themselves can you can you comment on exactly what their strategy was right the one some were looking at are they as institutional who are trying to buy a size in. fact before going to mess with you will you know whether it's

a loose change is all the liquidity was concentrated in one place so you can buy or sell the house and shares readily with the market knew it was there now we've got a dozen exchanges you won't have a thousand shares a nice sharing and you have one hundred shares that is serious so they were forced really high for trading it's for explicitly and just need to go to enormous lengths to get the same features that we had in the past so they have to bring order into the wilds of a one hundred share lots and they have to actually time it's so intense all of these exchanges and the precise exact time is that you know. one of the exchanges will will spill what they're doing onto the network and. pull their orders at the other exchanges well just to play devil's advocate here for a minute the average person is not a day trader and is more likely to buy and hold over our minds very near it and they're probably not concerned about pennies being shaved off their entry and exit

so is it really a problem for the average stock holder. if it well it is. when they have to sell in. much greater chance of being struck by lightning then in a victim on that day when it comes to sell also we live in a society based on law that says if you're ok with some people not following the rules because it doesn't hurt like for example if you could get how does. the fetch me i was at an event you know i was first. of next will continue to talk one man next founder eric cline saidor you want to hear what he has to say about the market micro structure toxic order flow and a rather cool reception by the f.c.c. two men prime interest producer bob inglis and i will take a trip through the robot going door to find out just who is on the inside now and we have a special announcement to make save him. going

to morrow. at least. there is really. the worst for those the only one out of a little radio guy and for a minute. i want. to give you never seen anything like that and i'm

still. looking for every dollar of the feel good luck you won't find it here if you're looking for relevant stories unique perspectives on top my scans starts now. now we have more where the air comes later of man eggs we talk to him about the role of options and high frequency trading. you mention apple there are five thousand different options on apple now how does h f t now play into the options

market. well it just decimating. the average person to analyze prices for moving the decision you know a lot of times people say well your burdens direct fees and and you get the benefit of that that's all fine you know on people base their decision on selling more than what. some people actually want any analyze prices and do economic forecasts that has become expensive because all is well there's no way it's in cross as they have to you have sealed you have to work with this really outside the scope of many academic it's right it's almost like electronic tradeable are not tradeable spam it moving on by law and exchange is supposed to execute a trade at the best available price among all the exchanges and it's called the national best bit offer or and b b o and this is calculated centrally by the

consolidated tape association and i want this to be clear because this is something i think that's very important that you're bringing up recently and you've discovered that the exchanges are not necessarily using this centrally disseminated source of quotes and information instead they're computing it on their own based on their proprietary data feeds with each of the other exchanges why does this matter . no one there is no consolidate you got a trial is no way to verify or prove word of the exchanges prices were at the time thanks. early years a lot of pressure in stealing time and no one really be able to figure out. whether or not that was the case and consolidated feet was specifically part of reading in maps so surely. there was a reliable party source and also into service and other troops know exactly where

the prices were and you went on and we don't have a consolidated on our trip we don't have you have to go until you look at the data to get nobody. you know all the teams forces and all the king's men. always say no it was you know in google technology everything out it's possible. it's just no there's no way to reconstruct it well moving on the f.c.c. it spent millions on its might a system just to be able to monitor the activities markets and real time now why didn't i think come to new and to subscribe to your services for just you know i feel thousand dollars. needed to have a budget. that's a very good question not. the one the one thing that bothers me the most about how that went was. that not just a normal wasting billions women could have constant thousands but not even not even

looking didn't want to know if you want to hear from one. in this impossible to build a consolidated all of internal system with the way. at the end video is not used from the set you know want to know that information fair in this innovation around the internet i mean i built that specifically to. show the f.c.c. however it's for we are not as they seem to not quite grasp the importance of consolidated quote and the importance of latency in system importance of peace and consolidated for audit trail purposes so you did talk with the f.c.c. and i'm just wondering if you had to have the opportunity to also talk to maybe the c.f. to see and did you find them receptive to what you had to say or were they just forced to listen to you because you were the only guys out there providing this kind of data. the c m d c it was worse than it was under a car window invited us out to live two thousand and ten after we published what we

found on the flash pressure or he was very receptive of. connectedness with many others and to see if the city even set a per ounce you are on this and with it we have been running be able to start actually working with state or we said the home of the plant. that was kind of the end of the f.c.c. it seems like they've always been forced to listen or that age have to have also prevalent and future areas and so in that regard the commissioner part of the c. f.t.c. has said he wants to put a good housekeeping fan of approval on every hour about and this thing that is maybe a little i think of all. what are your thoughts on how to rain and some of the damage that you think posing. far less than. i don't understand why it's taken you this long to find these things is there so obvious to us we've been

interested for a long time and there are other tributes of who who work in city market area there's no excuse for this isn't just blatant it's getting even more blatant the elation going up. all the walk away and. color jealous of puts out a paper that shows at the top a chip tees tain't likely to be fifty nine percent of the time and then if they're successful you see exploratory training which is and we need to be a loser strategy when that paper comes out of the c o t c s academic program using c a p c data and your response it's to curtail or severely incur academics access to this data you have food in the money. there was a favor of a founder of manic.

it's our favorite time of the day daily dool yes it is what's on the agenda today well we're going to guess what does bill de warren buffett michael bloomberg oprah winfrey and jeb bush all have in common i give up well we're not really sure about last weekend bill gave that rented out the entire sanctuary hotel for them to meet now there has been no information or reports on what they were actually talking about what we know they were on the story and literally one place and one place only no worlds right you know when there's no no information about what's going on ok so what's your guess what are you speculating ok i'm thinking we have bill gates here massive failure with windows eight warren buffett is there maybe warren buffett is there to help bill gates i don't know bill gates is worried about the

stock price of microsoft buffett's going to sell him some long dated puts like he did a few years ago he called them you know weapons of mass destruction or destruction at one point and these are derivatives but he's back in the game and then i guess we have bloomberg very he's a little scared he's been spying on ben bernanke or at least his employees of in the chief money printer is not somebody to be messed with so i guess she's just there for moral support she's very good at the moral support but she believes wealthy out of all of them she has a little bit to go i mean more wealthy than. well my guess is public education because this is bill and melinda gates foundation and their main causes and bill gates released his new plan and it was a report in the washington post last week is to put a video cameras in every single classroom and. america as part of the teacher evaluation system it would only cost five million dollars but he argues that cheaper than paying teachers salaries anyways and if you remember the movie waiting

for superman which emphasized the failures in the education system the gates foundation actually gave two million dollars to promote this film and it did your homework. and then gave appeared on oprah the week it launched to promote the movie himself and then former florida governor jeb bush of the twenty sixteen a presidential contender he's been promoting education reform through his foundation for excellence in education and tapping in michael bloomberg we all know that he wants to control every aspect of our lives and he's already had the entire city of new york. under video surveillance yes. and warren buffett he's one of the biggest supporters of the gates foundation so he's there in a bad bill gates every move of this teacher surveillance system so that's my best guess quoit that to talk to me. those are the. looping on that we're going to take a trip through the revolving door. first

he was bounced around between political appointments academia and even you too big to fail thank you for this jack lew gets the honor of being our first revolving door profile after serving in the clinton administration lui landed at new york university for a five year tenure he was gifted a one point three million dollar mortgage for a slinky brooklyn pad the mortgage was forgiven and interest reimbursed nice deal jack but his next assignment at citi it would trump that after presiding over the bank's giant this giant descended into insolvency from two thousand and six i think thousand and eight he received a bonus of a nine hundred and forty thousand dollars the very next year this was after city

had already received billions in taxpayer and fed life support but that bonus was contended upon in finding another job a full time high profile position with the united states government or a regulatory body seems he was destined for the revolving door trip because that's where he swung at through soon after serving as obama's budget director and chief of staff before becoming our current treasury secretary and at least he knows how to use turbo tax. next up they called her bloody mary that was the name given by the futures industry in the mid one nine hundred ninety s. after she went from a c c chairwoman to see up to see chairwoman then she thought emerged the two and of course we're talking about mary shapiro she would shortly join the ne is steven rise through the ranks in part during the bernie made us tenure there to become its chairwoman and c.e.o. and apparently fond of industry mergers she presided over the hook up between the ending of the street and the new york stock exchange to become what is known as finra then back to the top spot at the sea where she reversed her stance against

deregulation but to late on implementing jobs act in money market reforms well she recently cashed good heading to the top shadow regulator problem and tory financial group and what timing because they would soon. in the public spotlight for their role in the botched independent foreclosure review. very cool and we have one quake important announcement to make you make it all right we will be at the big quins conference this weekend and we will be talking with some of the top people in the big coin and we will be reporting on it next well you boarding in san jose california i think i do. it was quite the revealing day on prime interest we said white on bloomberg gate

and found a bunch of messages leaking from one of his terminals at least we know governor knows how to use one or has at least logged on once or twice seen some of our top regulators weren't too keen on chatting with those meddling kids to solve the flash crash mystery so we work but we slowed down a bit to talk to high frequency trader eric hunter a man and then bob and i drove to the ultra secret billionaire meeting and focused our power of the hypothesis we looked on the switch so we wouldn't trip over jacquelyn mary shapiro as we entered the revolving door zone and finally what can we say you might be invisible but you're crypto keepers aren't we'll see you soon thanks for watching prime interest come back tomorrow and make sure you follow us on facebook at facebook dot com science prime interest from everyone at prime interest i'm harry and have a great. the

british. market. what's really happening to the global economy with. the global financial headlines. is

a report. coming

up on r t the u.s. justice department spying on journal. lists the associated press reveals that the d.o.j. has been taking their phone records for months now supporters of the first amendment are demanding answers for this violation of the fourth estate more on the fallout coming up. authorities in moscow detained a member of the u.s. embassy under the suspicion of him being a cia agent there are even calls for the suspects expulsion from russia we'll have the latest on the case coming up. and the supreme court yesterday sided with monsanto against an indiana farmer it's a real life case of david versus goliath we'll tell you what the farmer actually thinks of the ruling later in the show.