Not quite as much as you think. A typical day trade at one of the major U.S. stock exchanges — such as the NYSE or Nasdaq — earns $300,000. The average salary for a professional trader was $170,000 in 2014, according to the Wall Street Journal.
“This is why I’m skeptical about the government’s claims about the financial crisis as it relates to high frequency trading,” said Matt Gold, director of research for the Washington, D.C.-based advocacy institute Common Sense Media. “These are not really big numbers.”
Still, he said that one way for Wall Street giants to make money is to lower prices for their stocks. The Securities Act of 1933, for example, grants the SEC the authority to force traders to be licensed and regulated. It also gives its commissioners the legal authority to revoke licenses of any firm found to be “engaging in any acts or practices which involve manipulative, deceptive, unfair or abusive practices in connection with its securities market operations.”
Some analysts are now warning that regulators have too much influence over the way the markets are run. In a report recently published by the New York Federal Reserve Bank, an organization that advises the president on monetary policy, two researchers argued that regulators have turned the markets into “an increasingly artificial market.”
“A large number of Wall Street firms, including the banks, are effectively operating their financial businesses like retail businesses, creating their own retail channels to meet the ever-growing demands from clients,” the paper said. “The process of raising funds for investment and lending is now often a highly coordinated effort that involves numerous participants.”
As evidence of the power of Wall Street, the bankers and traders who populate high-frequency trading desks at these firms can often find an answer to any question about a stock — including the exact speed that a stock moved. But by allowing the speed to be varied to suit their clients’ needs — which essentially enables them to buy and sell stock much faster than before — Wall Street firms violate a widely-used piece of legislation that was written to discourage this kind of behavior.
The rules have proven as effective as they were unpopular. In 2013, a major study of high-frequency trading called Forrester Research found that, as a rule, the firms that have been most aggressive at speeding up trades have fared best. But that study is not comprehensive.
“We didn’t examine all the trading on the exchanges at once,” said Kevin Osen, a senior policy analyst
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