A number of High Frequeny Firms Stopped Trading...
- Thread starter ASusilovic
- Start date
No, I just DON'T want to trade against scumbags/HFT leeches that create a false market 98% of the time, tell the public they're providing liquidity but as soon as some hiccup happens they run away/shut down & cry to the exchanges to CANCEL the orders!
That's a bs system.
Earlier this week, many in the US were crowing about how the 'crisis' was in Europe, that things are much better in the US, etc, etc, well, guess what? They didn't have this fake trading/cancellation of orders bs in those european exchanges this week. They also don't have the HFT leeches operation in the same degree as they do in the fake US market.
I would not be shocked if this was engineered by wall street in order to encourage more trading regulations. The wall street firms hate the way square, midwest shops like Tradebot have taken away a big component of their gravy train. Now, it seems their primary feast comes from Bubble Ben's ultra low financing rates, which of course can't last.
Market makers are leveraged middlemen. they CANT buy and hold a crashing market, because it would destroy them. They are facilitators, not buy and hold investors are unleveraged and as such can ride out huge losses. The real question is: Where were the long term investors who should have been feasting on this decline at much higher levels? They were sitting, scared to death due to the greek/euro crisis.
Lastly: If you look beyond the obvious first order causes, we can see can speculate that ultra low fed rates played a role. Why? Because people (primarily institutions) are using portfolio margining to borrow at 1% and invest in portfolios of stocks (and other risk assets) that yield far more than that, using extreme leverage. My guess: What we really saw today was a gigantic stop-loss order effect from all the yoyo's who are trying to take advantage of helicopter Ben's low rate policies. This absolutely overwhelmed the "middlemen" liquidity providers, and also overwhelmed the fearful (do to macro factors) long term investors.
I am in no way certain this is over.
Market makers are leveraged middlemen. they CANT buy and hold a crashing market, because it would destroy them. They are facilitators, not buy and hold investors are unleveraged and as such can ride out huge losses. The real question is: Where were the long term investors who should have been feasting on this decline at much higher levels? They were sitting, scared to death due to the greek/euro crisis.
Lastly: If you look beyond the obvious first order causes, we can see can speculate that ultra low fed rates played a role. Why? Because people (primarily institutions) are using portfolio margining to borrow at 1% and invest in portfolios of stocks (and other risk assets) that yield far more than that, using extreme leverage. My guess: What we really saw today was a gigantic stop-loss order effect from all the yoyo's who are trying to take advantage of helicopter Ben's low rate policies. This absolutely overwhelmed the "middlemen" liquidity providers, and also overwhelmed the fearful (do to macro factors) long term investors.
I am in no way certain this is over.
Thank you. A voice of reason.
No liquidity provider is obligated to blow up his firm and his investors to provide bids for you shmoes to hit.
The reason you all need liquidity providers is because the SEC has imposed so many rules, the liquidity has been sucked out of the market. Over the past couple of years, the SEC has been sticking it to market makers - making it virtually impossible to hedge positions in some cases. So, if the market gets violent, the bids are pulled.
In fact, more than a few market makers DID blow up today. Are any of you going to thank them for providing a bid for you to hit by paying their mortgage? As a matter of fact, you too can provide liquidity. Any of you can make a two sided market any time you want.
Never mind the black boxes. Where were YOUR quotes? Didn't want to take the risk? Then why should anyone else?
Any trader who isnt a hft would go back to eights and quarters in a new york second...And gladly pay a ten bucks a thousand shares.
I would be shocked if this were "engineered by Wall Street". Wall Street is a big place with A LOT of firms. The problem with collusion is that it never works because the interests are too divergent and the temptation to cheat too great.
This is simply the consequence of the SEC killing off market makers by many different methods - increasing ever more onerous compliance costs chief among them. When you systematically kill off market making firms, you're left with a handful of black boxes. If one of them is turned off....well....say good-bye to the bids.
The problem with the market is NO LIQUIDITY. That's a function of over-regulation. But, don't worry. This will be used as a pretext for more regulation and will lead to a more severe boom and bust market. I said that when they were over-regulating over the past year and Voila!
This is simply the consequence of the SEC killing off market makers by many different methods - increasing ever more onerous compliance costs chief among them. When you systematically kill off market making firms, you're left with a handful of black boxes. If one of them is turned off....well....say good-bye to the bids.
The problem with the market is NO LIQUIDITY. That's a function of over-regulation. But, don't worry. This will be used as a pretext for more regulation and will lead to a more severe boom and bust market. I said that when they were over-regulating over the past year and Voila!
Who blew up? Any big names?
Indeed...
"No bid" days are nothing new. HFT and electronic trading weren't there in 87.
In fact, electronic trading has reduced and certainly prevented real crashes in the last 15 years given the historic level of volatility during this period. IMO we would have had a bigger number of no bid days in a pit -like environment.
This sounds like PR bull shit, these firms have been targeted by regulators, now that the market crashes because of the 0% interest rates which caused a bubble, they say they have become indispensable.