Bernard Madoff, pioneer of electronic trading

Bernard Madoff was a pioneer of a legal but controversial practice which today makes the fortune of online brokers like Robinhood. Bernard Madoff Investment Securities (BMIS) paid brokers a few cents per share so that they could direct their clients’ orders exclusively to his firm. These orders no longer arrived on the New York Stock Exchange (NYSE) but directly to the computers of Madoff’s firm and into the pockets of its creator.

At the cutting edge of technology thanks to his brother Peter Madoff, BMIS wanted to capture the highest possible volume of securities on Wall Street and from the most varied investors (individuals, pension funds, etc.). Its operators permanently bought and sold thousands of securities, each time capturing small price differences in their favor. BMIS was seen as a high-frequency trader (super-fast trading firm). His computers were more efficient than the traders gathered on the floor of the New York Stock Exchange.

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