Ed’s Daily Notes for December 4th   Leave a comment

Bloomberg: Penny Pricing for U.S. Stocks Said to Get Scrutinized

Securities executives are trying to determine if the 12-year-old decision to narrow the price increments for American stock trading has harmed investors, according to two people with knowledge of the matter.

Representatives from exchanges, brokers, mutual funds and regulatory agencies held two conference calls yesterday to discuss concerns about market structure, said the people, who requested anonymity because the discussions were private. One topic was the U.S. mandate in 2001 to trade equities in pennies rather than eighths or sixteenths of a dollar, they said.

Compressing what traders call tick sizes reduced profits for human market makers and helped drive the ascent of high-frequency traders, which now account for about half of U.S. volume, according to data compiled by Tabb Group LLC. Widening price increments for smaller companies to a five or ten cents could spur trading and prompt more initial public offerings, according to U.S. Representative Sean Duffy, who has sponsored legislation to test such a shift.

Just speaking for myself, I rarely trade in less than penny increments. I think nickel or dime increments might be a bit much, but I wouldn’t mind seeing penny increments as the standard.

Washington Free Beacon: Healthcare.gov Security Risks Even Worse After ‘Fix’

The Obamacare insurance marketplace is even more vulnerable to security breaches since the administration “fixed” Healthcare.gov, according to a cyber security expert.

Health and Human Services (HHS) released a progress report on Sunday following its self-imposed Nov. 30 deadline to repair the website, saying that the “team has knocked more than 400 bug fixes and software improvements off the punch list.”

The administration said that the “site capacity is stable at its intended level,” though the site continued to crash on Monday.

The eight-page report made no mention of the website’s numerous security flaws, which experts say put Americans’ personal information at risk.

“It doesn’t appear that any security fixes were done at all,” David Kennedy, CEO of the online security firm TrustedSec, told the Washington Free Beacon.

Kennedy said fundamental safeguards missing from Healthcare.gov that were identified by his company more than a month ago have yet to be put in place.

“There are a number of security concerns already with the website, and that’s without even actually hacking the site, that’s just a purely passive analysis of [it],” he said. “We found a number of critical exposures that were around sensitive information, the ability to hack into the site, things like that. We reported those issues and none of those appear to have been addressed at all.”

After warning Americans when testifying before Congress on Nov. 19 to stay away from Healthcare.gov, Kennedy now says the situation is even worse.

“They said they implemented over 400 bug fixes,” he said. “When you recode the application to fix these 400 bugs—they were rushing this out of the door to get the site at least so it can work a little bit—you’re introducing more security flaws as you go along with it because you don’t even check that code.”

“I’m a little bit more skeptical now, and I would still definitely advise individuals to not use the website because it’s definitely something that I don’t believe is secure and neither did the four individuals that testified in front of Congress,” Kennedy said. “I think there’s some major security concerns there around privacy and information, and they haven’t even come close to being addressed, and won’t be in the short term.”

That sounds like good advice.

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Posted December 4, 2013 by edmcgon in Market Analysis, News

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