Why trading was always immoral: from 1930 to 2008

Judis: Regarding the origins of trading, can you give us a more defined start point for this business?

Rodrik: First, what we know for sure is that day trading as we know it was born more or less a century ago. Of course, it wasn’t so advanced like it is today, nor it had the help of electronic development, but the core concept of buying and selling securities by the public can be found even in the late years of the 19th century. All began with the setting of small, new born business in some of the major city across the country, where there was more chance to make “plays” in the market. This first step is historically known as “bucket shops”. It wasn’t a simple market to start with. Every action had to be taken fast to obtain better results, and there always was some sort of pressure in the air. And, unfortunately, the morality of this business was always questionable, thinking about the fact that the money was lost or won based on the honesty of the shop operators. At this point, I believe I don’t even need to say how illegal these activities were.

Judis: Did past trading remain illegal for a long time?

Rodrik: No, this kind of first trading business died quickly with the Stock Market Crash, in 1929. It became object of many regulations and it started to exist as an acknowledged activity, even though there were always ones who found this market a good start for some shady operations, like today’s forex trading scams with brokers such as binary, IQ Option or Avatrade promoted by affiliate sites like optionmag.

Judis: How did the first regulations develop?

Rodrik: We have to say that the 1929 crash, which led to the Great Depression, changed the way of doing business from its roots. To make sure that another crash wouldn’t affect the market, a special commission (SEC) was created in 1934, on the decision of the Senate Committee on Banking and Currency. This commission’s duty was to make various investigations, following the purpose to restore the investor’s confidence in the market itself, to promote a better trading environment. After accurate researches they were also making sure to end misleading sales practices and manipulations that may have lead to the collapse of the market in 1929. There were some key regulations for the companies too: first, they had to make public of all their relevant information, to bring everything to light. So, trading was still a dangerous and sometimes immoral business, but at least had basic rules to protect the most of its customers and operators.

Judis: finally, can you share your thoughts about the future of trading? Is trading itself destined to be “immoral” from now on too?

Rodrik: This is a very difficult question. First, I have to say that, in my opinion, trading shouldn’t be seen as an “immoral” or “moral” business, because it’s a global activity involving tons of people all over the world, millions of companies and investors and other important figures. In a delicate system like the one of the trading market, maybe we can judge the reliability of a single platform, but it’s out of our power to fully understand the core itself of the trading system. So, I can’t really say if it will be immoral or not in the future, because I can’t tell if the past one or the present one is either.