more news today volunteers once again fled the. scene these are the images cold

world has been seeing from the streets of canada. the giant corporations are on the day.

good afternoon and welcome to prime interest i'm harry i'm boring here and washington d.c. and here's a story that we're tracking the day. you hear it first here on prime interest and we're calling it bloomberg gate is heating up by a scandalous break in at a washington hotel first goldman sachs complained they 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 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 cozy 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 thousand from the board finally we highlighted the hot i.p.o. market yesterday with a bullish or bearish have to report that private act. the groups that have been snapping up homes are able to flip them into rental property i.p.o. but they're doing it much sooner than anticipated says a blogger i have met normally i'd wait a few years to give us 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 been your interest.

and. 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 eighty two received 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 the people across the us to access near real time stock prices and the trade on exchanges by the late one thousand nine hundred concerts 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 markets 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 quota system so in one nine hundred seventy five the securities and exchange commission was asked to help set up and oversee and nationalize the market system with centralized quotes as part of the national market system the national best bid or offer also known as and was created the rules require brokers to guarantee customers the best available price when they buy or sell securities for example if you place an order for stock x.y.z. 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 it's 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 price it in the minutes following the two

thousand and ten flash crash and be 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 of the. 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 the ticker on times square now the thing tyranny and history automation corporation. is the operator of the consolidated tape and in two thousand and six nice he took over a sigh ak and in a merger with euro next meaning that nice see your own x. i was the sole owner of the firms that provided security codes so once again nice these new york stock exchange company has regained exclusive ownership of the rights of the wall street ticker which brings us 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 a high frequency trading. trading firms are currently in line locked in a technological orange raise them a result in some big disasters. and suddenly he made this warning just a few months before the crash in two thousand and ten producer bob english and i have a chance earlier today to speak with eric's got his seder is the founder of man x. i first asked him if he agreed with senator kaufman characterization of the competition between exchanges and h f t firms as an arms race meaning that the two

are continually having to of the ante in terms of bandwidth and speed and here is his response. there's not really. exchange. trade. they're they're kind of in semiotic relationship. the arms race for going faster is kind of it's almost a gentlemen's agreement. to to to agree to a speed limit and not spend some of the death and we kind of see this because every time the nicely does a capacity upgrade h.f. two firms kind of spike the capacity and they just kind of push up against a glass ceiling but do they sometimes break it does that ever happen now well when they hit the top heat what happens is everything gets the lead. where are symbols are processed on that same on the same computer so computers will process certain

stocks. out of the first letter of the star and those on star symbols so 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. in that what then 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 sometime between nineteen thousand and eight cheeriest and now from that day the dow jones struck five hundred points in ten minutes and then recovered. so it was important for information not to get to ladies this is seen as there's all these machines are basing their intelligence of what to do on crisis and prices. saying curves in garbage out.

something wrong with that immediately pull out immediately in the blink of an ample out that's how old this is you know if we had it was the way it is on the say it's the last time. 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 and never seen could it be it's peter that fast and that great of magnitude it was something to behold but we thought that one of the results of that was quote stopping can you explain what the broader effects are on the market and on individual stocks are of course stepping. right so we have the opportunity to look at the major firms trade in actual trade data already data or

we see how sadly a long it takes to work in order and different stages of the order and what we found is when there are messages rates are high the smart order type of the credit a lot of crime on wall street will get behind hundreds of milliseconds it's pretty surprising that it doesn't take really that high of quote really. because it's more or rather stick it in are these are these smart border routers that you're talking about are these just are they trying to break up large trades for large institutional traders or the firms themselves can you can you comment on exactly what their strategy was right the ones that we're looking at today are they as institutional who are trying to buy a size in bat. act before reagan to mess with you know all of them whether it's with changes on the liquidity was concentrated in one place so you could buy and sell a basket shares readily with the market knew it was there now if it doesn't exchanges

you won't have a thousand shares a nice share and you have one hundred shares that is serious so they were force really high for trades for explicitly and just need to go to enormous lengths to get the same features that we have. well it's a one hundred share lots and we have to actually time it so it gets all of these exchanges and precise exact time this is the. one of the exchanges who will spill what they're doing onto the network and. you pull their orders and you know the 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 my answer year is and they're probably not concerned about pennies being shaved off their entry and exit so is it really a problem for the average stockholder. oh it well it is the.

way you have to sell them and you have a much greater chance of being struck by lightning in a very long then do you know also we live in the society based on laws if you're ok with some people out following the rules because it doesn't hurt like what for example if you could get it how does that affect me i was at an event i was first. up next we'll continue to talk about manic founder eric hunsicker you want to hear what he has to say about market micro structure toxic order flow and a rather cool reception by the f.c.c. and then prime interest producer bob inglis and i will take a trip through the robot thing door to find out just on the end now and we have a special announcement to make him.

well. it's technology innovation all the developments from around russia we've got the future covered. now we have more with eric on seder of negs we talk to him about the role of options in high frequency trading. play into the options market. well they're just

they're decimating the bill of 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 not far and you know i don't people base their decision on or selling more than what they've read some people actually want me analyze prices and do economic forecasts that has become certainly expensive because all is well there's no way that this process they have to have sealed 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 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 but 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

that i think that's very important that you're bringing up recently and you 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 . you know why there is no consolidate you got in trouble is no way to verify or prove were the exchanges prices were at the time. early there was a lot of leeway. in stealing pens every 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 sure there was a reliable price source and also to service and i don't know is. actually the prices were if you went on and we don't have

a consolidated on your trip we don't have you have to go until you look at the data to get nobody to. you know oftentimes forces and all the king's men. always saying oh it's you know in google sales you know 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 equity 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. to have the 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 since they're not even. looking it's almost like they didn't want to know if you want to hear from one. in this

impossible to build a consolidated all of interest system with the way. at the end video it's not used from the set you know want to know that information fair you may have seen this innovation around the internet i mean i built at specifically to show the a c c however it's for we were not as they seem to not quite grasp the importance of consolidated quote and the importance of latency in system importance of decent 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 july of two thousand and ten after we published what we found on the flash pressured or he was very receptive. 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 grandstander we said out of the plant. that was kind of the end of it yes to see it seems like it was then forced to listen for that age active also prevalent in future areas and so in that regard the commissioner part of the three 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 a. have all your what are your thoughts on how to reign and some of the damage that you thieving algos posing. far less of. i don't understand why it's taken you this loan to find these things is there so obvious to us who've been interested for a long time and there are obvious to others very soon who who work in supermarket

area there's no excuse for this isn't a blatant it's get even more blatant elation going up. all the walk away and. color jones sort of puts out a paper that shows that the top h. of t.'s table included be fifty nine percent of the time and then if they are successful you see exploratory trading which is for me to be a loser strategy when that paper comes out of the c o t c s academic program using c a t c data and your response it's to curtail or severely incur academics access in this data you have food in the money there was air of a founder of manic.

that's our favorite time of the day daily dool yes it is what's on the agenda today well we're going to take a guess what bill de warren buffett michael bloomberg over when three and jeb bush all have in common i give up well we're not really sure about last weekend bill gates and 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 don't know where all the story 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 windy 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 there he's a little scared he's been spying on been burning or at least has 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 that. 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 when 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 america in. 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. 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. i. first

he was bounced around between political appointments academia and even you too big to fail thank you for this jack lew has the honor of being our first revolving door profile after serving in the clinton administration lua 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 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 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 threw in the merge 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 the quake important announcement to make you make it all right we will be at the big queens 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 going there

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 powers of 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 slash prime interest from everyone at prime interest i'm harry and have a great. download

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you live on one hundred thirty three bucks a month for food because you know how fabulous i got so many i mean the towns i know that i'm sitting in the same place really messed up. and they're all very so personally apologize and. worse you're going to pay a little more white house to give it to the radio guy and for the tail minestrone cause they want you to watch closely to do because you've never seen anything like this i'm telling. you guys i'm not a martin's walking the break in the set you know this is a very exciting time.