The global stock markets have been reeling from the explosion in high frequency and lightening fast stock trading which are being conducted the the rather opaque dark pools of trading which are not under the purview of the stock exchanger of their regulator. These exotic out of sight and bound trading are are mainly played by few like Goldman Sachs, Credit Suisse, etc. the SEC and Finra are keen of expanding the volume, breadth and width of disclosures. As much as 36% of stock trading is being carried in these murky black holes.
Not much is known on the modalities of trading being carried out. We only wish these mysterious instruments and deals should not become weapons of massive financial destruction, which should further weaken the already fragile financial and banking systems in Europe and US.
Many large European banks are already under the lens of SEC. BNP And Credit Suisse have already been fined hefty penalties up to $ 10 bn for the former. BoFA is already slapped with a total penalty plus customer payments of about $ 18 bn.
All the above comes in the wake of a prolonged period of uneasy calm on the financial markets. The VIX, which is a measure of market volatility, has been stagnating at unusually low levels. This is compounded by extremely low bond rates since 2008 in US as evinced by the Feds Funds Rate Targets between 0 and 0.25%. Europe is buffeted by below 0% real interest rates and strong deflationary conditions in about half of the nations. Japan is desperately trying to recover from low investment by reducing corporate tax rates.
The global financial markets are indeed precariously placed. China and some of the other emerging markets like India and Indonesia seem to be the only economies which might try to offset the gloom and doom of the global financial markets
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