Update On “Broken Markets”

Joseph Saluzzi (jsaluzzi-at-ThemisTrading.com) and Sal L. Arnuk (sarnuk-at-ThemisTrading.com) are co-heads of the equity trading desk at Themis Trading LLC (www.themistrading.com), an independent, no conflict agency brokerage firm specializing in trading listed and OTC equities for institutions. Prior to founding Themis, Sal and Joe worked for more than 10 years at Instinet Corporation, pioneers in the field of electronic trading, and at Morgan Stanley.



It’s been about a month now since the release of our book Broken Markets . The book has certainly created lots of buzz in the industry.  There are many of you who love the book and tell us that it has helped you learn more about the equity market structure.  We have heard from numerous retail and institutional investors who have thanked us for publishing such a book knowing that its content may make us the target of some attacks by entrenched industry insiders.  One of the best phone calls we received so far was from a 72 year old retiree from Tulsa, Oklahoma.  After reading our book, he started to ask questions to his broker about his trade execution.  We have since corresponded with him and tried to advise him on which questions to ask and how to interpret the information in the answers he receives from his broker.

We have also received some very nice book reviews.  Here are a few excerpts from some reviews:

From Citizen John: “The book opened my eyes on why participants aren’t necessarily getting a great deal on $8 order fees. The brokerage firm has deals in place that route such orders through dark pools, where 90% of trades take place. Further, HFT systems create momentum designed to scalp average traders both coming and going. The HFT players create liquidity and utterly remove it at times per their algorithms, making the whole process extra frightening for retail investors.”

From InTheMarkets: “Arnuk and Saluzzi don’t pretend to be John Grisham, they’re stock brokers and reformers. They have been right over and over again about what needs fixing in our broken markets, and they write about it in the book with a passionate and engaging voice.”

From Louann C. in Grass Valley, CA: “I would recommend BROKEN MARKETS for every American interested in how our stock market has changed. I found it informative, challenging, yet easy to read. Kudos to the authors.”

Alright, enough with the patting ourselves on the back.  Before we published “Broken Markets”, we also were prepared to receive heavy criticism from the HFT community as well as others inside our industry.  We wrote this in the book:

Our critics and we have plenty may say that we are just trying to promote ourselves.  That we are old-fashioned brokers who cant keep up with technology.  But pay close attention.  Our critics will be same insiders that wrote comment letters to the SEC exalting the incredibly robust structure of our markets in the weeks preceding the Flash Crash…While we are prepared to bear the slings and arrows from this self-interested, short term profit-oriented community, we are not alone in our opinion.”

And our critics have not disappointed us.  While small in number so far, they have unleashed some nasty reviews.   Here is a look at some of those comments;

From Daniel in Cambridge , MA: “The authors are experienced old brokers/traders from the old Instinet that cannot compete and frankly understand the market microstructure only superficially. The bottom line is that they are bitter they cannot compete with the HFT, and don’t seem to have the skills to build good algos for execution. They didn’t complain in the past when they were sitting in the middle making huge spreads from their clients. (yeah, they want that system back)”

Daniel’s rant against us includes calling us stupid at least a dozen times and is much too long for this blog post.

From Cliff in Chicago: “The authors try to appeal to people’s sense of fairness and pursue a somewhat idyllic goal of having a fair stock market. However, stock markets were never fair and they never will be as there will always be someone with more information or resources than you (i.e., the regular investor).”

We welcome the comments, both good and bad.  One of the main goals of the book was to get the market structure debate out in the open and out from behind the closed doors of the insiders.  Based on some of these comments, we may be starting to accomplish that goal.



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