Bright Trading's new payout model

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Quote from Maverick74:

Regarding bullets, you would have made a good lawyer Don. Maybe you missed your calling in life. You have a way with words.

Let me know when you are in town, I owe you a dinner.

Let me ask you this Don, is it that you feel it's wrong that bothers you on on the sub penny issue, or the fact you can't make money on it. It just seems to me our ethics and values go out in the window as long as we are profiting from it. It always becomes an ethical issue when we are not making money from it.

You are killing me on the bullets though Don. Sometimes I guess we believe what we want to believe so we sleep better at night.
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(bullets first: simply a tool as far as we were concerned. When the regulators said "no" we just stopped using them as did most firms).

I know it seems rare, but there are those who feel that ethics and trading don't have to be mutually exclusive. We can both come up with long lists of repeated legal and ethical violators that neiher of us would want to be a part of. A big difference between running a business and what some others in this industry do....we'll chat about a major current case when I see you. There have been dozens, if not hundreds of "money making" paths that we could have gone down over the years...actually thrown in our laps....and yet we opted against them. We abide by the rules, we pay our Compliance Officer, always have. And, we're still here, so many are not.

VIX historical - here's the chart, a bit hard to gauge the exact numbers, and I can see where you see 20 and my brother sees 12, with the lower number taking place during the 1990's. Certainly some wild moves. I'll pretty much give you that one.

http://www.investmentu.com/2005/July/20050729.html

Don't think the VIX had anything to do with office closures. I see where you connecting dots between high "daytrader" vol and volume I guess.....but, I think the fact that we opted to close offices when the price of broadband came down to a point that everyone could connect for $49.00 per month vs. putting 20 people in an office paying $5k or more, made more sense....when leases came due, we saw little reason to keep so many places open. We left 120 Broadway when GS left for NJ and we would have had to pay retail rent. Technology has allowed us to be connected with all our people, no need for brick and mortar. Would I like more places, sure, would I like more traders, sure, but we seem to be hanging in there. Things change, no big deal.

It's funny, we used to be chided for being "old fashioned" with too many offices, not taking advantage of the Internet, LOL. Our overall trader base is down about 10-15% from it's historical high, FWIW.

Anyway, I hope all is going well with you and your Firm and traders. I'll PM you my travel dates when I buy my tickets.

Don
 
Quote from Don Bright:

(bullets first: simply a tool as far as we were concerned. When the regulators said "no" we just stopped using them as did most firms).

Don't think the VIX had anything to do with office closures. I see where you connecting dots between high "daytrader" vol and volume I guess.....but, I think the fact that we opted to close offices when the price of broadband came down to a point that everyone could connect for $49.00 per month vs. putting 20 people in an office paying $5k or more, made more sense....when leases came due, we saw little reason to keep so many places open. We left 120 Broadway when GS left for NJ and we would have had to pay retail rent. Technology has allowed us to be connected with all our people, no need for brick and mortar. Would I like more places, sure, would I like more traders, sure, but we seem to be hanging in there. Things change, no big deal.

It's funny, we used to be chided for being "old fashioned" with too many offices, not taking advantage of the Internet, LOL. Our overall trader base is down about 10-15% from it's historical high, FWIW.

Don
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Don, regarding bullets, I'm not accusing you of doing anything illegal, I'm accusing you of being blind to their purpose. The only reason they were legal for a few years is because like everything with the SEC, they are always 5 years behind Wall Street. They were hidden under the radar. Once the SEC found out about them, they shut them down immediately.

Your "Dennis Dick" is bitching about having someone subpenny him on a stock yet he probably had no issues jumping ahead of the public selling stock with impunity while the retail public is sitting on the offer waiting for an uptick to sell the stock. I'm just calling him a hypocrite that's all. Doesn't make him a bad person, just a hypocrite.

Don, we use to drive down stocks 3 dollars on the open without a single uptick while the public finally gets short on the cleanup print on the lows. It got so bad the specialists firms tried to sue many prop firms for driving stocks down. Remember, specialists could not get short either until the uptick so they were getting screwed too. But anyway, I'm not going to beat a dead horse here, just calling out the hypocrisy, that's all.

As to the VIX and your office closings, Don I hope you are not trying to imply having the VIX at 10 is good for your business because I know for a fact it's not. I would say daytraders in equities p&l is 100% correlated to the VIX. And trading volumes are also close to 100% correlated to the VIX. I'm not trying to imply you don't have guys that can grind out a few bucks when the spoos have a 5 handle range, I'm saying it's not good business. We can surely agree on that.

Sure a lot of your guys wanted to trade from home instead of going to a physical office. But Don, my friend, 100% of the true prop firms here in Chicago are all office based. Less then 1% of them trade from home and there about a thousand good reasons for that. My theory as to why many of your guys opted to trade from home (and not just your guys) is that they are what I call hobbyist traders. They are not active accounts and many of them ran other businesses while they were trading and many of them quite frankly were not profitable. This is true of most remote guys, not just at your firm.

So yes I do believe there is a correlation between your office closings and the VIX. And it wasn't just your firm, but all firms. Worldco also shut it's doors as the VIX was collapsing. That's 1000 traders Don, 1000. All gone. The elimination of bullets also contributed to that.
 
I'm pretty sure that this conversation, though interesting to us (with the history, ancient to some, LOL, etc. WorldCo, Bullets, VIX at 10 etc. )...and I look forward to chatting over cocktails with you.

I'm also pretty sure we're boring everyone to death.

If the debate on sub-pennies wants to continue, however, my position is simply an even playing field. Nothing grandiose or holier than thou, just simple fairness.



Don .
 
Quote from Don Bright:

I'm pretty sure that this conversation, though interesting to us (with the history, ancient to some, LOL, etc. WorldCo, Bullets, VIX at 10 etc. )...and I look forward to chatting over cocktails with you.

I'm also pretty sure we're boring everyone to death.

If the debate on sub-pennies wants to continue, however, my position is simply an even playing field. Nothing grandiose or holier than thou, just simple fairness.



Don .
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Are you sure you want to give me cocktails, I might tell you how I really feel. :)

Don my whole dissertation above speaks precisely to the sub penny issue. This whole "level playing field" is all bullshit. The markets have never been level. And never will be. It's always the ones on the wrong side of the trade that want a level playing field. That's why I brought up the bullet issue. You were not an advocate for a level playing field then were you? Surely you are not saying bullets were a "level playing field"?

The sub penny issue is a result of new technology and the evolution of markets. I am not interested in having a 100 new regulations to keep "leveling" the playing field. Just adapt! Pretty soon Don we are going to run out of levels and the government is just going to decide there should be no speculators period. Will you be happy then? Perfect level playing field then.
 
We are losing sight of what our markets exist for, they arent really for traders. If HFT, sub pennying, etc are making everything more risky then they should be banned. The liquidity card may or may not be the right way too look at things. A lot of people point to Darwin and evolution, but he doesnt say anything about wether that evolution is good or bad. Remember CDOs!
 
Quote from Maverick74:

Are you sure you want to give me cocktails, I might tell you how I really feel. :)

Don my whole dissertation above speaks precisely to the sub penny issue. This whole "level playing field" is all bullshit. The markets have never been level. And never will be. It's always the ones on the wrong side of the trade that want a level playing field. That's why I brought up the bullet issue. You were not an advocate for a level playing field then were you? Surely you are not saying bullets were a "level playing field"?

The sub penny issue is a result of new technology and the evolution of markets. I am not interested in having a 100 new regulations to keep "leveling" the playing field. Just adapt! Pretty soon Don we are going to run out of levels and the government is just going to decide there should be no speculators period. Will you be happy then? Perfect level playing field then.
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Au Contraire, I was thrilled when they eliminated the uptick rule...making a level playing field.

And if you're not for "level playing fields" then I might just have to ask you to play with only 4 cards in our next poker game... or to have to bet in $100 increments, or go to an auction where bidders can out bid you buy 1/100th of a penny...the public, traders, hedge funds, everyone dealt with trading in pennies, why only a few who don't even post orders be allowed to front run the rest of us?

My view, that's all...

Don

If I don't respond for a while, it's because I have to teach for a bit, but will later.....:)

Edit: CNBC called me again and now wants to speak with someone from the "other side" who engages in HFTrading. Do you guys do it? Would you like to share your views if you do? I'm serious about this.
 
Quote from JamesVU2000:

We are losing sight of what our markets exist for, they arent really for traders. If HFT, sub pennying, etc are making everything more risky then they should be banned. The liquidity card may or may not be the right way too look at things. A lot of people point to Darwin and evolution, but he doesnt say anything about wether that evolution is good or bad. Remember CDOs!
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OK, I'll listen. Walk me through this. How are sub penny's a threat to the retail public? James Simmons cited a study on CNBC saying sub penny liquidity has put billions (not millions) but billions of dollars in investors pockets since their inception. I'm listening.
 
Quote from Don Bright:

Au Contraire, I was thrilled when they eliminated the uptick rule...making a level playing field.

And if you're not for "level playing fields" then I might just have to ask you to play with only 4 cards in our next poker game... or to have to bet in $100 increments, or go to an auction where bidders can out bid you buy 1/100th of a penny...the public, traders, hedge funds, everyone dealt with trading in pennies, why only a few who don't even post orders be allowed to front run the rest of us?

My view, that's all...

Don

If I don't respond for a while, it's because I have to teach for a bit, but will later.....:)
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Don, yes you were for elimination of the uptick rule after they got rid of bullets!!!!!!!!!!! Everyone was for the elimination of the uptick rule because it was killing prop traders without the use of the bullets.

And Don enough of this poker analogy. The markets are far more complicated and fragmented then 5 guys sitting at a poker table. My argument is still and will continue to be the hypocrisy of those screaming for a level playing field only when it benefits them.

What this does Don is our society becomes a never ending tug of war of never ending regulations every time the music stops and someone loses. After a few years there are so many losers and thousands of new regulations. And the process just feeds on itself. Because those new regulations will create "new losers" then they complain and more regulations follow creating "more losers" creating more regulations and it goes on and on until the markets are one big clusterf*uck. Enough already. Let's start removing some of these regulations, not adding new ones.
 
I dont know if it is or isnt bad, but everyone hides behind the liquidity card. Does the public care if they get to sell shares that theyve owned for 10 years for an extra penny or two? Maybe you do get more efficency, but if the technology and strategies in order to get that extra penny results in a giant meltdown then it wont be worth it.
 
Quote from JamesVU2000:

I dont know if it is or isnt bad, but everyone hides behind the liquidity card. Does the public care if they get to sell shares that theyve owned for 10 years for an extra penny or two? Maybe you do get more efficency, but if the technology and strategies in order to get that extra penny results in a giant meltdown then it wont be worth it.
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That's a red herring. The argument cited for the flash crash is that liquidity disappeared. Well if you remove those players from the system, guess what, the liquidity disappears! Seriously, this is much ado about nothing.

In my humble opinion, one of the biggest causes of the flash crash was the facts that all the world markets are becoming correlated to one. Everything moved together. The start of the flash crash was not in stocks by the way, it was in currencies. A huge yen carry trade got unwound across various pairs including the aussie, pound, and euro. We saw moves in those currencies that quite frankly were historical. Now who are we going to blame for that? Are we going to go after currency traders now?

When those yen trades triggered, it rolled over to the indices (futures not stock). Then as the futures tanked, stocks were the last to get hit. There was incredible size going off. The trades were real. Again, this 100% correlation thing is getting dangerous and that is because everyone is in the same trades. Why? Because we have printed so damn much money in this world and all this currency has to go somewhere. It's going into the same funds, the same strategies and their behavior is identical all moving lock step with each other. It has nothing to do with freaking pennies or sub pennies. And it will most likely happen again. Maybe we should stop printing so much f*cking money. Just a thought off the top of my head.
 
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