Mark Cuban Rips Into The HFT ‘Hackers’

The other day we saw a tweet go by from Kathleen Hayes of Bloomberg Radio that read:

“Kathleen_Hays: #MarkCuban on now! Talking #DallasMavericks, NBA collective bargaining agreement – he voted against it – salary caps and a whole lot more!

As many of you know, we are big fans of Mark Cuban for a number of reasons including his stance on high frequency trading.  He is no fan of HFT and has written about the dangers of it on his blog . After we saw Kathleen’s tweet, we sent her over a Bloomberg note and asked her to ask Mark Cuban about HFT. We got lucky and Kathleen had some time left in the interview to ask the question. Take a listen to the barrage that Mark Cuban unleashed on HFT in this audio clip  (fast forward to the 13 minute mark of the clip):

Cuban: “It’s dangerous. There are two issues here. One is what is the role of the stock market these days? In the past, it’s been a place where growing companies can go and raise capital. The whole function was to raise capital. That’s not the case anymore. The number of IPO’s and secondaries has dropped considerably. Instead, it’s really become a platform for hackers. It’s all digitally driven, it’s all automated and it’s run by software. Trading is done via software. And the thing about software is that there is no such thing as perfect software. Any software that has ever been written has bugs in it…We’ve gotten to the point now where algorithms are trying to out-speed and out-smart other algorithms. In that type of scenario, any number of bad things can happen and I don’t see any good things that can happen.”

Later in the interview Cuban talks about the potential for a transaction tax. He says that the HFT’s will immediately argue against the tax and say that it would widen spreads. Cuban responds to this argument:

“So what? The fact that there are tighter spreads has not really provided any more value to investors. If you go back over time when spreads were wider, volumes were heavier in many cases…Having a market full of investors rather than hackers will make for a much better market and will increase the opportunity for companies to raise capital.”

Battling the HFT machine is not easy to do. They are well financed and extremely protective of their turf. Their lobbyists camp out in the halls of Congress to make sure no regulations are even proposed that would hurt them. But the HFT lobby continues to lose the public relations battle. Every time they trot out some old executive or academic to push the party line, their arguments have been quickly struck down by the real owners of the market.  More high level voices keep joining the chorus of industry participants who are concerned about the future of our stock market. Mark Cuban, Michael Price, Jim McCaughan, David Dreman, Andy Brooks and many other owners of the market are speaking up and want to take their market back. The HFT lobby reminds us of the Mitt Romney campaign in Iowa. Romney spent millions of dollars in Iowa only to beat a guy, who knocked on doors in 99 counties of Iowa, by 8 votes. That guy, Rick Santorum, worked his tail off to get his message out. Let’s keep knocking on doors.