Unfortunately my response was killed for some reason. But Mav I would agree with you for the most part. At the same time we get regualtions from morons who go on tv every month as a result of CNBC and try to pretend they know what they are talking about before regulators and the Fed. Not that I have much respect for the Fed. We get new stupid regulations because of a few morons who manipulate the system. Like my old job there are a few who screw the rest of us that are playing by rules. There are always those that play at the lines of legal and in the long run those jerk offs screw the rest. I've seen it in my past everyday job, and now in my job of trading. I respect what I do, but those that play at the fringe are going to make life difficult for the rest. The best I think can be done is go public with our end of the busisness, somewhat like Don does and make public the dirtbags, and stress the benfits of our end of the business.
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yep, exactly.
the other side of the carry trade was corp debt. if you look up the corp debt names on the 6th, just like the yen, the move started much before the drop and really started throwing off the etfs, which in turn, which in turn...
pointing the fingers at hft's is a cop out. the reasons the markets got illiquid is because everyone's books were stuffed to the gills with the HUGE size being pushed through locked to bid. what was coming down the pipe was more than the market could bear, plain and simple.
i suppose though, it's less scary to think the flash crash happened because of some stupid computers vs a complete unraveling of our entire financial structure. computers can be regulated, financial collapse can't.
Actually (back to bullets) we had our own system in place when the uptick rule changed, so it was, in some ways, detrimental to our traders.
As to sub-pennies: OK, we may have to agree to disagree (again)â¦(excuse if I put this in an extreme manner, I am smiling as I'm typing)....if you donât mind this type of front-running, either by seeing orders that others donât (inside information as far as Iâm concerned) or being able to jump in front of existing displayed markets in denominations not available to other players, then fine.
You donât like the poker analogy (ok), but since we are supposed to have âauction marketsâ maybe the auction parallel would better fit. If youâre bidding on a car, and a computer keeps bidding one penny higher ad infinitum, wouldnât you soon simply stop bidding altogether?
Regarding the govât over-regulating and eliminating speculators altogetherâ¦.well (hold your breath), I agree with you in many respects. With too much regulation (as Iâve just told my students)â¦âbe careful what you wish forâ â we could end up seeing shares of GE offered on aisle 5 at the local Wal-Mart at a fixed price each month. I am not an advocate of eliminating free markets, I just want the rules to be similar among the players. And I think currency denomination is vital to this.
You didnât respond to my question about you or your firm engaging in the (perfectly legal) HFtrading? Or if you would like a bigger forum to share your views. Not that you need/want me to do so, itâs just that I have been getting the calls lately?
Don
Don, I must have missed the question but to my knowledge, my firm does not engage in HFT.
Why don't you just pony up and get into the HFT game then? Are you trying to tell me that your firm is being blocked from the action? Build the software, contact those liquidity pools and get in the game. Honestly Don, I can't understand what you are saying here. Are you telling me that you are willing to spend the money and labor to get in that game but are not able to?
I know some HFT guys here in Chicago Don. Matt Gray who was on CNBC yesterday with your buddy, is a friend of mine. The guy built his operation from scratch Don, from scratch. He spent a lot of money and time to get into the game. Nobody stopped him. What is stopping you? Please help me understand this because I obviously am missing something here. I am all ears. You have the floor Don.
As a business decision we don't think the rewards to the Firm or the traders would justify the investment at this point in time....and, again, we don't mind the speed of access etc., more the denomination factor. We didn't dive whole hog into liquidity providing ala my friends at Swift either...that sort of fizzled out, but in all fairness made good money for Charles and Peter.
I re-watched the interview with Dennis and Matt, and it seems to me that they were more in agreement about the level playing field. The interviewer called them both HfTraders, which is simply not true (hard to figure coming from CNBC, LOL).
I applaud your buddy, as I do anyone who is entrepreneurial in this day and age...since there are "no jobs" as we are being told, the small business/trader (or whatever business) is the way to go. You're familiar with our story, we started from scratch (actually Bob did, I had his help, LOL)....
Don
Thanks for quoting me Don. I couldn't have said it better myself.
Okay, we're not talking about HFT being the problem here. We're talking about internalization being the problem. You can pony up all you want, get to an HFT level, and possibly participate in some internalization pools. But the ones you participate in will be exhausted flow, where the orders have already been passed over by the major B/Ds. It's not about money at the very high level. It's about your customer base, and your connections. The majority of internalized flow is done by the major B/Ds, and they are not gonna let you in that game.
Matt was behind us on that argument yesterday, re-watch the clip. There is basically three tiers. Tier 1 being the B/D internalizers, Tier 2 being the rest of the HFT world, and Tier 3 everyone else. Tier 2 we can get to. Tier 1 is unattainable.
Our reliance on debt vs equity has put the who world in a very risky situation. Everything thinks fixed income is less risky, but thats not the case. It just blows up less frequently but its much more devastating when it does. All people should be following ust market, corp bond, hy etc. When they move they take equities with them.
I'm just going to post this, WTF.
I've spent the better part of 2010 working on a business plan, funding, systems, consultants, the works, to build a new HFT-like company, looked at acquiring a couple of smaller companies in this space floundering, and talked to to seriously high up CTOs and CIO of some major technology companies looking to move into this space who don't have the wall street resumes to get past the nets at Goldman or BlackRock, but who could with a startup on their resume that did it their way. NY has this "thing" against silicon valley going back to the late 90s I find particularily humourous, since we were the ones bringing IPOs to them, not the other way around. They were the ones who created the bubble, we were building the companies, great companies, that died because of wall street greed.
So when I say I'm "on the fence" about proceeding, despite having the capital and the talent and a very sound business plan, I'm trying not to talk shit to promote what I'm doing, I'm more soliciting the opinions of a few selectively stealth individuals lurking in the weeds thinking the same thing but haven't found the right opportunity to reveal themselves to stand up and declare their presence.
Personally, I think HFT will be severely limited in terms of sub-penny and fronting by SEC restrictions in the software, the flash crash will create a whole mess of new problems for the detritivores scraping the bottom, and will likely eliminate the majority of the problem so the field is leveled. I'm more interested in slower HFT, strategic trades, position trades in the "dark" pools out there among hedges and such based more on fundamentals than calculations, major short positions against overboughts and overvalued going into 2012 recovery earnings, mass market psychology, volatility, movement during corrections and rallies, taking advantage rather than being taken advantage of.
If any of that makes sense, I'm around...
I've spent the better part of 2010 working on a business plan, funding, systems, consultants, the works, to build a new HFT-like company, looked at acquiring a couple of smaller companies in this space floundering, and talked to to seriously high up CTOs and CIO of some major technology companies looking to move into this space who don't have the wall street resumes to get past the nets at Goldman or BlackRock, but who could with a startup on their resume that did it their way. NY has this "thing" against silicon valley going back to the late 90s I find particularily humourous, since we were the ones bringing IPOs to them, not the other way around. They were the ones who created the bubble, we were building the companies, great companies, that died because of wall street greed.
So when I say I'm "on the fence" about proceeding, despite having the capital and the talent and a very sound business plan, I'm trying not to talk shit to promote what I'm doing, I'm more soliciting the opinions of a few selectively stealth individuals lurking in the weeds thinking the same thing but haven't found the right opportunity to reveal themselves to stand up and declare their presence.
Personally, I think HFT will be severely limited in terms of sub-penny and fronting by SEC restrictions in the software, the flash crash will create a whole mess of new problems for the detritivores scraping the bottom, and will likely eliminate the majority of the problem so the field is leveled. I'm more interested in slower HFT, strategic trades, position trades in the "dark" pools out there among hedges and such based more on fundamentals than calculations, major short positions against overboughts and overvalued going into 2012 recovery earnings, mass market psychology, volatility, movement during corrections and rallies, taking advantage rather than being taken advantage of.
If any of that makes sense, I'm around...
That's not true. You can get to tier 1 but you choose not. I'm not saying it would be cheap, but obviously you could "become" a tier 1 BD internalizer". And if your response is that it's too costly to get into that business, well they "did" get into that business and they have a right to profit from the costs and risks associated with being in that business. Once again, I fail to see what the argument is. Look, as a BD we have certain advantages the public doesn't have by being a BD. We also have far more costs and risks then the public has as well. We can't equalize one without the other. It's called pay to play. If you want to play, then write the check.
Look, we are in the market making game. There are ridiculous costs associated with that business. However there are structural advantages over the public and other prop firms for that matter by being in that game. Anyone can get into that game but it's not cheap and certainly is not easy. So I'm still lost here on the argument.
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