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HFT GOOD or Bad for Market
- Thread starter Roxiticus
- Start date
Quote from stock777:
"I have heard of them going back as far as 2002 (currently) to fine and ban traders who have had algo HFT strats"
wtf are talking about?
High Frequency Trader Fined: âQuote-Stuffingâ Crackdown Afoot?
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Dow Jones Newswires Nathan Becker reports:
The Financial Industry Regulatory Authority said it had censured and fined Trillium Brokerage Services LLC $1 million and fined and suspended 11 of its employees in connection with using an âillicit high-frequency trading strategy and related supervisory failuresâ to gain an advantage.
The financial regulator said that through nine proprietary traders, Trillium entered ânumerousâ layered, market-moving orders that generated selling or buying interest in specific stocks. By entering those orders, Trillium traders âcreated a false appearance of buy- or sell-side pressure,â Finra said, noting that because of the strategy, the traders got advantageous prices that otherwise wouldnât have been available to them on 46,000 occasions.
Finra said it fined the traders, Trilliumâs director of trading and its chief compliance officer a total of $802,500 and ordered a combined $292,000 of disgorgements. The 11 people were suspended from the securities industry or as principals for periods ranging from six months to two years.
In settling the case, the small New York brokerage and the employees didnât admit or deny the charges but consented to the entry of Finraâs findings.
The âillicit high-frequency trading strategyâ in question sounds quite a bit like the âquote-stuffing,â a practice spotlighted by The Journal in a front-page story earlier this month. That piece defines quote stuffing âunusually large numbers of orders to buy or sell stocks ⦠placed in a fraction of a second, only to be canceled almost immediately.â Some, theorize that the practice may have played a role in the May 6 âFlash Crash.â A joint SEC/CFTC report on the âFlash Crashâ is due sometime this month.
Quote from traderpro:
A lot of traders have left the game after the "bots" came into play. They just didn't adapt, the stocks end up reacting the same, the jiggles are more of a _____ and make those traders who left lose their patience. We all see the pivots, its learning the game within, the FLASH CRASH gave the HFT the bad rap but understand there are people who have their retirement in the markets and that day they got the sh!t scared out of them and this has to be addressed now. I have heard of them going back as far as 2002 (currently) to fine and ban traders who have had algo HFT strats and i think its wrong but the big boys(the govt) out there can do what they want.
There is no proof that HFT caused the flash crash. To this day, we don't know what caused the flash crash. It could have been a fat finger error. Sudden market plunges have happened b4 in the US and in other countries but of a smaller magnitude. Both were fat finger mistakes.
Again, the government needs to study the impact of HFT b4 doing anything. They could create problems or make the problems worse.
The current circuit breakers/speed bumps might be enough to stop sudden plunges.
Quote from SteveNYC:
There is no proof that HFT caused the flash crash. To this day, we don't know what caused the flash crash. It could have been a fat finger error. Sudden market plunges have happened b4 in the US and in other countries but of a smaller magnitude. Both were fat finger mistakes.
Again, the government needs to study the impact of HFT b4 doing anything. They could create problems or make the problems worse.
The current circuit breakers/speed bumps might be enough to stop sudden plunges.
They are just looking to blame someone for it, HFT gets the blame here, im with you ITS WRONG, but "it is what it is"...
Quote from traderpro:
High Frequency Trader Fined: âQuote-Stuffingâ Crackdown Afoot?
Article
Comments (1)
MarketBeat HOME PAGE »
Digg
+ More
smaller Text larger
Dow Jones Newswires Nathan Becker reports:
The Financial Industry Regulatory Authority said it had censured and fined Trillium Brokerage Services LLC $1 million and fined and suspended 11 of its employees in connection with using an âillicit high-frequency trading strategy and related supervisory failuresâ to gain an advantage.
The financial regulator said that through nine proprietary traders, Trillium entered ânumerousâ layered, market-moving orders that generated selling or buying interest in specific stocks. By entering those orders, Trillium traders âcreated a false appearance of buy- or sell-side pressure,â Finra said, noting that because of the strategy, the traders got advantageous prices that otherwise wouldnât have been available to them on 46,000 occasions.
Finra said it fined the traders, Trilliumâs director of trading and its chief compliance officer a total of $802,500 and ordered a combined $292,000 of disgorgements. The 11 people were suspended from the securities industry or as principals for periods ranging from six months to two years.
In settling the case, the small New York brokerage and the employees didnât admit or deny the charges but consented to the entry of Finraâs findings.
The âillicit high-frequency trading strategyâ in question sounds quite a bit like the âquote-stuffing,â a practice spotlighted by The Journal in a front-page story earlier this month. That piece defines quote stuffing âunusually large numbers of orders to buy or sell stocks ⦠placed in a fraction of a second, only to be canceled almost immediately.â Some, theorize that the practice may have played a role in the May 6 âFlash Crash.â A joint SEC/CFTC report on the âFlash Crashâ is due sometime this month.
The article seems to indicate market manipulation.
What types of stocks was Trillium quote-stuffing?
Are we talking about illiquid stocks that have average daily volume in the 100k's or liquid stocks that have average daily volume in the millions?
Regardless, this strategy seems risky and could cause a firm to blow up any day. What if they get filled on the fake orders and they end up holding huge positions and the positions go against them quickly?
They might take huge losses to get out of their losing positions.
In other words, they pick up pennies with their HFT but on a few occasions, they lose dollars when things go wrong.