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To: JasonC

There were some recent articles on a theft of GS trading code. One story reported (excerpt):

“because of the way this software interfaces with the various markets and exchanges, the bank has warned it could be used to “manipulate markets in unfair ways”

From: http://www.cnbc.com/id/31783285.

My question is: How do they know the software can be used to manipulate the market in unfair ways? And does this have any relationship to their $6.8 billion in second quarter trading profits?


26 posted on 07/20/2009 2:48:52 PM PDT by mike70
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To: mike70
No. It is simply used to route block trades efficiently, to move a market price as little as possible while filling the order. People trying to move a lot of stock don't want the price to move a bunch before they are done making the trade.

If someone doesn't care how much money they lose they can reverse the objective and trade as dumb as possible to move a market as much as possible for the amount sold. They'd hurt themselves but would also destabilize the market they traded in.

35 posted on 07/20/2009 3:07:38 PM PDT by JasonC
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