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 today. 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 at goldman sachs complained it got wind that bloomberg reporters were trolling their log and records now we know at least one employee was keeping tabs on the none other of 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 close 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 said from the board finally we highlighted the hot i.p.o. market yesterday but it's a bullish or bearish i have to report that private equity groups that have been snapping up homes are going to flip them into a 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 to 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 eighteen hundreds 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 the 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 what 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 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 it 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 in the national stock network but the best price for that stock was on the boston stock exchange but 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 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 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 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 and i see took over a sigh ack and i'm 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 they see the. 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 was in the fine print of stop quoting. senator ted kaufman spent part of his time in congress warning about high frequency trading. high frequency trading firms are currently locked locked in a technological orange raise them a 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 english and i have a chance earlier today to speak with eric's got him sader honor of man x.

i first asked him if he agreed with senator kaufman characterization of the competition between exchanges and h.s.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. exchanges. the trading. relationship. the arms race going to or is trying to it's almost a gentlemen's agreement. to agree to a speedy. and we kind of see this because every time the nicely does a capacity upgrade h.f. 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 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 stops and you know what they are out of the first letter of the star symbol is where one of those star symbols gets 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. or that what they have 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. the p.c. can stay at the p.c. the last time we had a similar century from ation wasn't sometime between ninety thousand and eight cheeriest an hour from that day the dow jones five hundred points about ten minutes in the current. and you. can't seem to get too late if this is seen as.

all these machines are basing your intelligence of what to do on prices and prices ruled same curves in garbage out. something wrong with that they need really pull out immediately in the blink of an i'm 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. yeah stalinists truly finding her since i've been doing this and i started by. and you can say is i've never seen could it be is peter that fast and that greed of magnitude it was something to behold but we thought that one of the results of that quote stopping can you explain what the broader effects are on the market and on individual stocks are of course up and. right so we have the

opportunity to look at the major firms trade natural trade data already data or we see sadly a lot of it takes to work in order and then different stages of the order and what we found is when there are message rates are high the smart order routers tighten 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 . time and are these are the smart border routers that you're talking about are these just are they trying to break up large trades for large institutional traders or they have to firms themselves can you can you comment on exactly what their strategy that right there was and we're looking at it are they as institutional who are trying to buy a size in bad. back and forward to mess with you know all of them whether it's a loose changes on the liquidity was concentrated in one place so you can buy or

sell a basket shares readily with the market knew it was there now it doesn't exchanges you won't have a thousand shares a nice share and you have one hundred shares that is since so they were forced really high to see trades 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 well over one hundred share lots and they have to actually tighten its own hence all of these exchanges and to precise exact timing because these out. one of the exchanges will will spill what they're doing onto the now or and. you should. pull the orders that. well just apply 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 entries and exit so is it really

a problem for the average stockholder. oh well it is the. way you have to sell them and you have a much greater chance of being struck. in your very long term so no 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 for example if you could get it how does that affect me i was at an event i was first. next will continue to talk when manic founder eric hines saidor 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. 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 end side now and we have a special announcement to make him. well

. it's technology innovation all the developments around russia. the future covered. real damage and complexity of this oil spill was not something you can just by looking at dirty birds we have between four to five million people in this directly affected area of the coast and it's pretty clear why it's not being reported because b.p. can't afford to have a reported all along the gulf coast are clean they are safe and they're open for business if b.p. is the single largest oil contributor to the pentagon the us war machine is heavily reliant upon b.p. and their oil this is a huge step backwards for the woods. carex it is toxic as it looked

like spraying and. it was a it was not a picture that either the government or b.p. really wanted to have out there i don't want dispersants to be the agent. this boils. down load the official publication to you so choose your language stream quality and enjoy your favorite. if you're away from your television just doesn't matter now with your mobile devices you can watch on t.v. anytime anywhere.

now we have more web airtime satre of mannix we talk to have 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 they just decimated. 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 i'm people base their decision or selling more than what they've read and some people actually want me 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 his really

outside 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 bet 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'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 then suddenly you've got a truck was no way to verify or prove were the exchanges prices were at the time.

really it was a lot of. time and no one really be able to figure out. whether or not that was the case and consolidated feet was specifically part of mass so surely. there was a reliable party source and also just servers 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 a utility going to look at the data. nobody says. you know unseen sources and all the king's men. always say now as you know in google's 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 of markets and real time now why didn't i think the 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 normal wasting billions women could have constant thousands but not even not even looking it's almost like they didn't want to know if you know when i hear from one. in this impossible to build a consolidated audit trail system with the way to. the end video is not used from the said you know want to know that information. in this innovation around the internet i mean i built that specifically to. show the f.c.c. howard is for weaver not because they seem to not quite grasp the importance of consolidated quote and the importance of latency in system important so he's been

consolidating 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. of d.c. 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 . c.m.t. seems 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 pressure or he was very receptive. connectedness with many others and to see a city even sadder per ounce you are on this and with it we have been running be able to start actually working with the state or we said the home of the plant. that was kind of the end of the b.s.e. sea it seems like it was been forced to listen or that a tactic is also prevalent in future areas and so in that regard the commissionaire parts help then at the c f t c has said he wants to put

a good housekeeping fan of approval on every hour and they think it is maybe a little. ok of all your what are your thoughts on how to reign and some of the damage that you think goes posing. far less than. i don't understand why and certainly this loan to find these things is there so obvious to us we've been interested for a long time and there are obvious to other terrorists and those who who work in supermarket area there's no excuse for the blatant it's getting even more blatant the elation going on in his heart of all he was up at when i'm at home or just sort of puts out a paper that shows at the top a chip tease 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 absence of this data you have food in the money. there with air time favor 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 oprah winfrey and jeb bush all have in common i give up well we're not really sure but last weekend bill gave them 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 literally one place and one place only no worlds right 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 been burned or at least has employees of 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 moral support she believes wealthy out of all of them she has a little bit to go she's 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 in. as part of the teacher evaluation system it would only cost five million dollars but he argues that cheaper than paying the teacher salaries anyway and if you remember the movie waiting for superman which emphasized the failures and the education system the gates foundation actually gave two million dollars to promote this film and we 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 under video surveillance. and warren buffett he's one of the biggest supporters of the gates

foundation so he's very bad bill gates every move of this teacher surveillance systems that's my best guess quite that to talk to me. those are the. right 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 lui landed at new york university for a five year tenure he was gifted a one point three million dollar mortgage for a so winkie 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 at the thousand 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 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 it 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. the 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 emerge 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 and the new york stock exchange to become what is known as finra then back to the top spot at the city where she reversed her stance against deregulation but the 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 a quick 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 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. here's

mitt romney trying to figure out the name of that thing that we americans call a dog. i'm sorry i'm just a guy who cares an awful lot but you sir are a fool you know what that is my self. want us to feature is not the only liberal democrats template you. can secure believe that it's. going to support you to distract us from what you and i should care about because there are profit driven industry that sells us sensationalistic garbage because of breaking news i'm happy martin and we're going to break this that it's. it's. more. than anything.

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