On Sept. 15, investors had the chance to see open and blatant market manipulation take place at a time when the S&P 500 was showing signs that it was beginning a trend downward, with traders selling off the major index since the open. Around 10:27 EST, traders using the Chicago Board Options Exchange (CBOE) were told that trading was suddenly halted for the SPX (S&P 500) just when the index was threatening to fall below the support level of 1980 on strong volume. Immediately after trading re-opened, the S&P 500 shot up more than five points to 1984 and once again began a much slower decline to its current level of just above 1980.
What is most ironic in all of this, is that the Chicago Mercantile Exchange (CME) passed a rule recently that was meant to halt manipulation in the options market, and attempt to provide clarity to investors who have bypassed the CME in recent months, as seen by the decline in trading volume that has created little counter-party risk to the incredible move to 2000 on the S&P 500 in a short period of time.
It appears Rule 575 is having an impact today. Quietly this morning, CBOE traders were told at 1027ET that the S&P 500 index was “currently unavailable for trading.” As the following chart shows, this halted a drop in the market and instantly enabled a levitation to near the day’s highs. Unrigged? – Zerohedge
The belief that the stock markets are, and have been rigged for some time was blown wide open earlier this year when financial author Michael Lewis unveiled his whistle blowing book, Flash Boys: A Wall Street Revolt. In this book, Lewis provides evidence that the major brokers rig the markets using High Frequency Trading (HFT) computers and algorithms that front-run markets, and create an unfair playing field where trades are not executed on an equal basis, but to the brokers who pay high premiums to be first in line by nanoseconds over everyone else.
Like the way the U.S. is currently using proxy wars against Russia to protect the petro-dollar from losing its status as the reserve currency, the exchanges, along with the Federal Reserve, are using any and all means to manipulate equities to ensure markets do not decline, or even experience a small or medium correction. And even with new rules and regulations put into the markets to provide a facade of safety and fair practices to investors who no longer trust the U.S. exchanges, it appears that these rules were very short lived, and market manipulation will continue to keep stock indexes from ever declining below desired levels.