High-frequency trades that give some investors an unfair advantage over others “goes against everything Charles Schwab stands for,” the company’s CEO said Tuesday.
Walter Bettinger, president and CEO of Charles Schwab Corp. (NYSE: SCHW), spoke to the Denver Business Journal Tuesday about the highly publicized trades, as well as the company’s plans for metro Denver, during a visit to the city this week.
Bettinger was in town to speak at the University of Denver’s Daniels College of Business signature series, “Voices of Experience,” where C-suite executives share their industry experiences, challenges and insights.
High-frequency trades, which use sophisticated technology and computer algorithms to trade securities, have been getting a lot of attention this week after a “60 Minutes” report Sunday alleged that those trades rig the market against the average investor.
“Chuck [company founder Charles Schwab] and I are on record about being concerned about high-frequency trades,” Bettinger said. “The idea that any market participant should get favorable treatment … that’s just incredibly troubling to us. Frankly, we’re unhappy with what we see happening with the exchanges.”
Schwab and Bettinger penned an opinion piece in the Wall Street Journal in July 2013, long before the “60 Minutes” report, that said it is “becoming increasingly difficult for individual investors to compete on a level playing field. The system seems rigged against them. And they are responding by walking away.”
They specifically focused on high-frequency traders that they said “are gaming the system. Using sophisticated algorithms, high-frequency traders can trade stocks in an instant. Some flood the market with orders, then cancel 90 percent or more once they’ve glimpsed the state of the market and gleaned an advantage.”
Schwab and Bettinger argued that “regulators need to do more to ensure that all professional traders are playing by the same rules as the rest of us.”
On Tuesday, Bettinger said the thing that’s most important to him is that “people view our markets as place they can get a fair shot. Do I think the long-term investor gets a fair shot? Absolutely.
“Nevertheless, any time any market participant has advantages over someone else, it goes against everything Schwab stands for,” he said.
Regarding the company’s plans for Denver, Bettinger confirmed that the city will be getting some of the jobs the company is moving out of its San Francisco headquarters.
“We haven’t made a decision on where the jobs are going to go, but some positions in San Francisco today will head to Denver,” he said.
The DBJ’s sister publication, the San Francisco Business Times, reported in February that Schwab told employees that it plans to move “a significant number of San Francisco-based jobs” to other locations over the next three to five years.
Charles Schwab is building a large campus in Lone Tree that will consolidate its 2,000 metro Denver employees there. The campus includes 467,000 square feet of office space on a 40-plus-acre site. The company has said it plans to add up to 500 jobs at the campus in the next five years.
“We’re excited to be building a bigger footprint in Denver, but we’ve been longtime Denver citizens and have had a significant workforce here for many years,” Bettinger said.
The company remains committed to having its headquarters in San Francisco, however.
“We’ve been reducing our footprint in San Francisco for many years; our employment there is down 75 percent from our peak,” Bettinger said. “But it’s a great location for our headquarters with the tremendous technology talent in the Silicon Valley and the innovation that goes along with that.