The idea is simple: Charge a miniscule extra fee on every trade executed at every registered exchange. Such a simple charge would make much algorithmic "churning" of volume uneconomic, while bringing institutional and retail trade back to the major exchanges and away from the electronic communication network "dark pools."
You'd begin to relevel the playing field for retail and private investors, generate confidence by returning fairness to the stock markets, greatly reinvigorate employment in the financial markets and gain a nice source of unexpected revenue, too.
Besides the black box owners, only the exchanges wouldn't like it: They've spent the last five years encouraging the machines -- even spending money to buy algorithmic volume generation and giving preferential access to the biggest "market makers" such as Citadel, Goldman Sachs (GS) and Knight. The exchanges don't care about fairness -- they only care about volume growth.
But trying to reverse the tide on algorithmic trading will help the exchanges in the long run, like a bartender cutting off the chronic drunkard before he goes over the edge. As more and more machines remove more and more humans, these glitches, failed offerings, flash crashes and investor recoil will doom the proper operation of the stock markets for everyone, and bankrupt the exchanges in the process.It's time to put people first and reverse the trend on the machines, reinvigorating what once was an industry that showcased the best of American capitalism and individual grit. At the time of publication, Dicker had no positions in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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