Mark Cuban was-well-Mark Cuban on Thursday. The billionaire
entrepreneur, investor and owner of the Dallas Mavericks, isn't
one to edit his words and he certainly didn't do it Thursday
during a CNBC interview.
First, some background. Worth a reported $2.4 billion, Cuban
didn't make his riches by investing in the stock market. In fact,
he's about as big of a fan of the stock market as the NBA is of
him. If the critics of high frequency trading wanted a celebrity
spokesperson, Cuban would be the perfect choice. In a
Wall Street Journal
interview, Cuban said this about high frequency traders:
"They are the ultimate hackers. They're running software
programs that have one goal, and that's to exploit the trading
systems as early and often as possible."
What did he say on Thursday?
Cuban, in a CNBC Fast Money Halftime report interview, was
first asked about the fake AP tweet and said, "A hundred and
forty characters and - what was it? - $200 billion worth of
market cap just disappeared for a few minutes and then it came
back. I mean, it was crazy." He went on to say that Wall Street
shouldn't be surprised that such events take place when the
market is dominated by algorithmic trading-some of which scans
for keywords in news headlines and makes trades based on those
Then, he repeated what he wrote about in a 2010
: Wall Street doesn't know what business it's in. His argument is
that the stock market was originally created to provide capital
for businesses in exchange for an equity stake that allow the
investor to share in the profits over time through stock
appreciation or dividend payout. Instead, it's a complicated
"chess match" where most don't understand the game.
"We've gone from a market designed to raise capital to support
new businesses to a platform designed for algorithmic traders and
hackers," Cuban said Thursday. He points to the lower amount of
IPOs and secondary offerings as proof that stock markets are no
longer attractive to company and don't work in the investor's
What is High Frequency Trading?
What is his solution?
First, he wants to eliminate taxes on capital gains and
dividends on shares of stock held for at least five years.
(Assuming that would apply to private as well as public shares,
that would certainly lower his tax bill considerably.) Second, he
floated the idea of a trading tax. Finally, he wants, "the genie
put back in the bottle" for high frequency traders. He wants the
practice eliminated. Speaking again about the fake AP tweet, he
"What's going to happen when there's a real event? Do you
really think that there's going to be any bids at all?" he said.
"All we have are circuit-breakers that we hope will work. And
then after the circuit breakers, what happens?"
View Marketfy's high frequency trade webinar
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