In the 1980’s and 1990’s financial markets in general were unregulated. Sharing of information was encouraged by employers. Personal relationships with traders and brokers from different institutions led to an exchange of knowledge of customer orders.
One could even take a central bank out to dinner and not get carted off to jail for some kind of inappropriate behavior. Depending on how good your meal and drinks were, you might get an order from the central bank the next day.
Nowadays that might get you 10 years. Alas, we have moved on from the days of Mortimer and Randolph Duke stealing the orange crop reports. Anyone under 40 will have to Google that reference I’m sure.
Moving forward to the present, the aforementioned practices of personal relationships and exchanges of information are now deemed illegal. Overzealous regulation by overzealous lawmakers, backed by overzealous politicians, have all but said that you cannot speak, text, chat, tweet, email or smoke signal anything to anyone else involved in the market. I’m not sure you can even tell your dog how your day went.
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In over 30 years in the FX markets, I have taken 9,137 compliance courses and was awake for a total 5 minutes during those times; however, I was conscious long enough to get 2 very good pieces of advice to adhere to – ‘ if you don’t want it read, don’t type it and if you don’t want it heard, don’t say it.’
You’ll get caught!
I’m getting tired of reading about market participants taking short cuts and doing things that are now illegal and getting carted off to jail. It gives hard working honest traders a terrible public image. I bring up the latest cyber crime scheme hatched out of the Ukraine. The intricate scheme involved hackers and over 30 traders. 2 Ukrainian hackers were able to hack into news wire services and stole hundreds of corporate earnings reports before they were released publicly.
The SEC said the international scheme was unprecedented in the scope of the hacking, the number of traders and the amount of securities traded and profits generated. One thing though, they got caught. Bernie Madoff was doing really well until he got caught.
In the end, I will say I dislike the over-regulation; however, some is clearly necessary. I detest Dodd- Frank. However, if you are a young trader out there thinking of taking a shortcut or exchanging information that shouldn’t be exchanged, don’t do it. Don’t say it, don’t type it.
Ask the Ukrainian guys if it was worth it. The Dukes ended up homeless. Bernie Madoff will get out when he is 2,000 years old, ask him if it was worth it. You’ll get caught and it is never worth it.