GO
Loading...

Cramer: Why SEC won't crack down on HFT

(Click for video linked to a searchable transcript of this Mad Money segment)

There's been a lot of talk lately about high-frequency trading, both good and bad.

Although Jim Cramer believes that individual investors can generate better returns than the pros, even pros involved in high frequency trading, he doesn't like the practice of high-frequency trading, in the least.

In fact, Cramer compares high-frequency traders to mosquitoes. "There is no positive case to be made for mosquitoes," he said in his explanation of the analogy.

But even if they are a blight on humanity, as Cramer alleges, the "Mad Money" host also doesn't expect the Securities and Exchange Commission to crack down on high-frequency trading anytime soon.

Although nobody knows exactly what's being said privately inside the SEC, Cramer has come up with three reasons why he thinks the SEC hasn't come out against so-called HFT.

Loveguli | Vetta | Getty Images

"One is that, somehow, they believe high-frequency trading fulfills a function," he said. Advocates of high-frequency trading contend it provides liquidity as well as lowered costs and tightened spreads.

"Second is that the SEC just doesn't think it matters," Cramer added. Of course, due to the firestorm generated by the new book "Flash Boys," by Michael Lewis, that theory may no longer hold water.

"Finally, there's the possibility that the SEC thinks there shouldn't be an expectation of total fairness in the market," Cramer added.

That's not to say high-frequency traders are above the law; they're not. There's nothing illegal about high-frequency trading.

Cramer is simply wondering if the SEC feels high-frequency trading is more of an industry issue that doesn't have significant impact on most individual investors, and therefore isn't worthy of the time or money needed to address the issue.

-----------------------------------------------
Read MoreMad Money with Jim Cramer
Cramer: Signs suggest market vulnerable
Hated stocks getting some love, again
Do you fear stocks in bubble?
-----------------------------------------------

He says that the bottom line is that the issue won't be resolved anytime soon.

"I don't believe that anyone will eradicate the high-frequency mosquito because no one in authority seems to think it's necessary. But don't ask me to like it and definitely don't tell me that it's good for me."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book