The National Association of Securities Dealers, the NASDAQ began trading fifty years ago today on February 8, 1971, as the world’s first electronic stock market with for over 2,500 listed securities. In November 1998, the National Association of Security Dealers announced that the American Stock Exchange would merge with the National Association of Securities Dealers creating “The Nasdaq-Amex Market Group.

In 2000, the NASDAQ membership voted to shift from being a utility facilitating fair and open transactions between buyers and sellers to a shareholder-owned-for-profit company.  Since then, other world exchanges have morphed and merged into similar for-profit-models.  This change of business structure began the degradation process still unfolding including selling some groups advance notice of information and the perverse payment for order flow incentives now widely used.

Part of this is brokers who now sell the orders of their customers to ‘high frequency traders’ who can pay cost-of-business-fines and purchase complacency from regulators including central bankers and legislators via revolving door private-sector gigs when they leave office.

The self-funded propaganda from the grotesquely-enriched few is that all of this ‘sophistication’ helps the masses via market liquidity and cheap trades.  The reality is the complete opposite: a financial sector rife with conflicts of interest and integrity-free-trading systems that extract their profits under the guise of financial advice and investment services.

This is a major part of the rot that has eroded public trust and engendered the extreme wealth and rule of law disparity now undermining social stability worldwide.

The clip below explains the tripling in transaction costs for pensions, mutual funds, and individuals that have flowed from this mess; not to mention the magnified capital risks.

Jeff Alexander, Founding Partner of Babelfish Analytics, joins Worldwide Exchange to discuss how the recent retail trading frenzy is costing the typical retail investor. Here is a direct video link.