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of the investors who constitute the ultimate end users of the exchange's services. This do-nothing-at-any-cost policy is pasted to every exchange. |
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Moreover, the boards of directors are handpicked individuals who owe their success to the system and will tolerate no action that could alter the equilibrium. No director will stand up for accelerated change and risk being dropped from the management reelection slatewith the rare exception when change benefits the industry insiders. |
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For example, economists have suggested that one cause of the 1987 market break (also called the "Crash" if you lost money) was program trading. Program trading is computerized trading in which, for example, one computer system that is trading index futures snags a low price, which triggers other computerized systems to dump the underlying security. This shark feeding frenzy of continued selling distorts the supply and demand equation, causing the security to drop like Newton's apple due to the influence of artificial selling. The sell-off may start so quickly that there is no time for human intervention, with the devastating consequence that the market fuels its own meltdown. |
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After the crash, not one major rule change was enacted to prevent continuing programmed trading. A few minor rule changes added meager delays to the timing of when multifarious programmed trading would begin. Once again, the change was to the detriment of the investor. |
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