Somebody should hook up a supercomputer to the exchanges with flash priviledges and publish the type of information these HFT's are interested in and acting on to the general public . An HFT algorithm structured for the general public consumption. Would that help? Is this not an entirely new business model brokerages like Schwab, ETrade , IB , et al can exploit to the benefit of their account holders? I wonder what their opinion is of HFT's or do they not see it as any threat to their business?
High frequency traders literally printing money!!! LITERALLY PRINTING MONEY!!!!
- Thread starter S2007S
- Start date
Quote from "dailykos.com" making quite a few things clear no matter what the legal situation looks like:
""May 12 (Bloomberg) -- "Four of the largest U.S. banks, including Citigroup Inc., racked up perfect quarters in their trading businesses between January and March, underscoring how government support and less competition is fueling Wall Streetâs revival.
"Bank of America, JP Morgan Case &Co. and Goldman Sachs Group Inc., the first, second and fifth-biggest U.S. banks by assets, all said in regulatory filings that they had zero days of trading losses in the first quarter. Citigroup Inc., the third-largest, doesnât break out its daily trading revenue by quarter. It recorded a profit on each trading day, two people with knowledge of the results said."
What do we call government support and less competition in the market place? We call it the same thing that Benito Mussolini called it. "Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power."
What would you call a poker game where the house wins every hand and the suckers get fleeced? The only difference is that in Las Vegas they donât charge you fees to lose.
Meanwhile, in the other economy, Rome still burns; city, county and states face massive budget cuts due to falling revenue from the rubes and weed benders like myself out of work. Social programs are cut and eliminated while for the banks free money is just a phone call away. Free money that you and I will be expected to pay for later. The huge bank profits are earned by using your money and the bonuses will be paid with your money and the loses will be covered with your money.
We have become a corporate, feudal state, a Latin America-style banana Republic with a huge and bloated military, a small corporate elite and a government with a subservient court system. A government chosen from the ruling elite with millions upon millions of poor, suffering peasants who are expected to pay for it all.""
""May 12 (Bloomberg) -- "Four of the largest U.S. banks, including Citigroup Inc., racked up perfect quarters in their trading businesses between January and March, underscoring how government support and less competition is fueling Wall Streetâs revival.
"Bank of America, JP Morgan Case &Co. and Goldman Sachs Group Inc., the first, second and fifth-biggest U.S. banks by assets, all said in regulatory filings that they had zero days of trading losses in the first quarter. Citigroup Inc., the third-largest, doesnât break out its daily trading revenue by quarter. It recorded a profit on each trading day, two people with knowledge of the results said."
What do we call government support and less competition in the market place? We call it the same thing that Benito Mussolini called it. "Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power."
What would you call a poker game where the house wins every hand and the suckers get fleeced? The only difference is that in Las Vegas they donât charge you fees to lose.
Meanwhile, in the other economy, Rome still burns; city, county and states face massive budget cuts due to falling revenue from the rubes and weed benders like myself out of work. Social programs are cut and eliminated while for the banks free money is just a phone call away. Free money that you and I will be expected to pay for later. The huge bank profits are earned by using your money and the bonuses will be paid with your money and the loses will be covered with your money.
We have become a corporate, feudal state, a Latin America-style banana Republic with a huge and bloated military, a small corporate elite and a government with a subservient court system. A government chosen from the ruling elite with millions upon millions of poor, suffering peasants who are expected to pay for it all.""
"The whole concept of the stock market is to create a central point for people to invest in a corporation. How is buying and selling a stock in under a second anything at all like "investing"? It's pure gambling, milking the real investors of cents on every dollar, putting it into the pockets of traders that provide zero value to society. They produce nothing except market crashes."
http://yro.slashdot.org/story/10/05/19/2210204/New-Circuit-Breaker-Imposed-To-Stop-Market-Crash
http://yro.slashdot.org/story/10/05/19/2210204/New-Circuit-Breaker-Imposed-To-Stop-Market-Crash
That's it
jerkstore,
HFT has become a bit of a catch all. As you point out I was not being very clear. I feel the payment for order flow, flash quotes, order internalization, and lack of equal dark pool regulation are the big issues.
hft has become a catch-all agreed, and it's a dangerous catch-all because it's stigmatizing a large group of participants in the markets with all of the markets problems. all of the issues you bring up aren't hft issues, they're structural/regulatory issues. associating these issues with automated traders is misrepresentative and disinformative. calling for regulation of this subset of the industry as a result of these issues is disingeuine at best.
Again, you obviously come from the stock world. Payment for order flow is very distinct from liquidity rebates. It is not clear from your post that you understand this.
ok, yes, in the options world it's a different dynamic. this however, does not mean hft is to blame. if the cboe makes stupid rules, it's going to have stupid markets. if you legalize theft, do you penalize the theives or do you chastize the shop owners who leave their doors open?
What is with your fixation on liquidity rebates? What comment on rebates do you find absurd exactly?
i obviously thought you were speaking of equities. you addressed the differences in the rebate structure. your comments made no sense from an equity standpoint.
This is where we disagree. Flash quotes are an enormous issue. They are banned on public exchanges (almost) while dark pools and order internalization still allow the largest companies to front run orders. Perhaps this is a definition issue.
this is an issue i think you don't understand. dark pools came into existence from the demand of buyside firms to try and hide their size from public markets. what you see taking place in dark pools is EXACTLY what you'd see occuring in public markets... price/liquidity discovery! if darkpools were not a value-add to the marketplace large buyside firms would be executing in public markets. seeing as how >50% of the volume is executing in these pools, i would say there's obviously added value for the buyside or they wouldn't be using it (as a note buyside IS the average investor represented by their pension/mutual funds). 'front running' in dark or public markets (the way it's being 'defined' by politicians and people in this thread) does not exist. if you or anyone defines 'front running' as using publicly available tools to identify price/liquidity discovery and trading ahead of it, then you've failed to understand one of the basic tenents of how markets actually work.
the internalization you speak of (which is exemplified in sub-penny trades) is not front running either, rather, it's a perfect example of the free market at work. you have a regulatory imposition (no sub-penny trading), and you have private exchanges who are not bound by that regulation providing that service to their customers. get rid of the limitation imposed on markets on specifying the degree of decimalization and boom problem solved. i hope you're seeing that most ALL of the issues we're discussing have their source in some bonehead sec regulation.
What industry am I demonizing? If your answer is any but politics, then you are mistaken.
you called the hft industry a cancer to markets. that's the type of bullshit propaganda rhetoric you'd here from levin and is PURE POLITICS. you, like most people, are intentionally associating and/or confusing an industry with structural/regulatory issues and use the two terms as if they were interchangeable. the effects of this will be bad for ALL traders as it will only spur MORE REGULATION.
I do think that the regulatory and current market structure encourages some very scummy HFT methods, which I feel are driving out those firms that provide actual liquidity to the marketplace. Future May 6th type of events, where most bids/offer disappear during periods of extreme one directional order flow, will be a natural result. Again this is the fault of regulators, rather than the trading companies. The market participants are merely doing what they need to do to stay in business.
ok, i agree with the second part which seems like it's revising the first part. market participants are adapting to regulation, trying to stay in business, so how can it be scummy? i think you realize, it's the regulation that creates these abnormalities. get rid of the regulation, you actually will have fair and orderly markets.
re may 6th... the reason most bids disappeared that day was twofold... 1) liquidity providers were stuffed to the gills with long exposure and the cost to hedge became ridiculous, there was no way to hedge. 2) due to exchange 'bust' rules, there's very little incentive for market makers to provide liquidity on markets after certain percentage extensions (starting at 5-10%) when the probability of having that trade broken is VERY high, this in turn exacerbated point 1 and vice versa. if buyside firms feel it prudent to unleash massive orders in short time frames breaching those exchange bust boundaries, then imo, they should reap the consequences. live by the sword, die by the sword.
No. I want to fix it with PROPER regulation.
regulation is what's causing most of the issues we're seeing in our markets. putting people who don't trade in charge of making rules that limit market participantion will always be detrimental. however, these issues can be solved in the courts, which is what they're there for. holding exchanges responsible for market failures along with abolishment of most restrictive regulation will allow some semblance of order in the chaos. as it is now, exchanges are indemnified of all liability of participant action (or misaction). if held responsible for failure to keep their markets orderly, then we'd see an incredible amount of exchange based risk control, we'd see vola auction models like in europe, and we'd see much more punitive action against member firms (by exchanges) who in anyway harmed market structure. what we have now though, is an old boys club where the buyside ineptitude is forgiven with a pat on the back, and the liquidity provider is penalized for making markets. the current regulatory rhetoric (ie the witch-hunt for hft firms) will only serve to exacerbate problems. my posts here are an attempt to show this.
HFT has become a bit of a catch all. As you point out I was not being very clear. I feel the payment for order flow, flash quotes, order internalization, and lack of equal dark pool regulation are the big issues.
hft has become a catch-all agreed, and it's a dangerous catch-all because it's stigmatizing a large group of participants in the markets with all of the markets problems. all of the issues you bring up aren't hft issues, they're structural/regulatory issues. associating these issues with automated traders is misrepresentative and disinformative. calling for regulation of this subset of the industry as a result of these issues is disingeuine at best.
Again, you obviously come from the stock world. Payment for order flow is very distinct from liquidity rebates. It is not clear from your post that you understand this.
ok, yes, in the options world it's a different dynamic. this however, does not mean hft is to blame. if the cboe makes stupid rules, it's going to have stupid markets. if you legalize theft, do you penalize the theives or do you chastize the shop owners who leave their doors open?
What is with your fixation on liquidity rebates? What comment on rebates do you find absurd exactly?
i obviously thought you were speaking of equities. you addressed the differences in the rebate structure. your comments made no sense from an equity standpoint.
This is where we disagree. Flash quotes are an enormous issue. They are banned on public exchanges (almost) while dark pools and order internalization still allow the largest companies to front run orders. Perhaps this is a definition issue.
this is an issue i think you don't understand. dark pools came into existence from the demand of buyside firms to try and hide their size from public markets. what you see taking place in dark pools is EXACTLY what you'd see occuring in public markets... price/liquidity discovery! if darkpools were not a value-add to the marketplace large buyside firms would be executing in public markets. seeing as how >50% of the volume is executing in these pools, i would say there's obviously added value for the buyside or they wouldn't be using it (as a note buyside IS the average investor represented by their pension/mutual funds). 'front running' in dark or public markets (the way it's being 'defined' by politicians and people in this thread) does not exist. if you or anyone defines 'front running' as using publicly available tools to identify price/liquidity discovery and trading ahead of it, then you've failed to understand one of the basic tenents of how markets actually work.
the internalization you speak of (which is exemplified in sub-penny trades) is not front running either, rather, it's a perfect example of the free market at work. you have a regulatory imposition (no sub-penny trading), and you have private exchanges who are not bound by that regulation providing that service to their customers. get rid of the limitation imposed on markets on specifying the degree of decimalization and boom problem solved. i hope you're seeing that most ALL of the issues we're discussing have their source in some bonehead sec regulation.
What industry am I demonizing? If your answer is any but politics, then you are mistaken.
you called the hft industry a cancer to markets. that's the type of bullshit propaganda rhetoric you'd here from levin and is PURE POLITICS. you, like most people, are intentionally associating and/or confusing an industry with structural/regulatory issues and use the two terms as if they were interchangeable. the effects of this will be bad for ALL traders as it will only spur MORE REGULATION.
I do think that the regulatory and current market structure encourages some very scummy HFT methods, which I feel are driving out those firms that provide actual liquidity to the marketplace. Future May 6th type of events, where most bids/offer disappear during periods of extreme one directional order flow, will be a natural result. Again this is the fault of regulators, rather than the trading companies. The market participants are merely doing what they need to do to stay in business.
ok, i agree with the second part which seems like it's revising the first part. market participants are adapting to regulation, trying to stay in business, so how can it be scummy? i think you realize, it's the regulation that creates these abnormalities. get rid of the regulation, you actually will have fair and orderly markets.
re may 6th... the reason most bids disappeared that day was twofold... 1) liquidity providers were stuffed to the gills with long exposure and the cost to hedge became ridiculous, there was no way to hedge. 2) due to exchange 'bust' rules, there's very little incentive for market makers to provide liquidity on markets after certain percentage extensions (starting at 5-10%) when the probability of having that trade broken is VERY high, this in turn exacerbated point 1 and vice versa. if buyside firms feel it prudent to unleash massive orders in short time frames breaching those exchange bust boundaries, then imo, they should reap the consequences. live by the sword, die by the sword.
No. I want to fix it with PROPER regulation.
regulation is what's causing most of the issues we're seeing in our markets. putting people who don't trade in charge of making rules that limit market participantion will always be detrimental. however, these issues can be solved in the courts, which is what they're there for. holding exchanges responsible for market failures along with abolishment of most restrictive regulation will allow some semblance of order in the chaos. as it is now, exchanges are indemnified of all liability of participant action (or misaction). if held responsible for failure to keep their markets orderly, then we'd see an incredible amount of exchange based risk control, we'd see vola auction models like in europe, and we'd see much more punitive action against member firms (by exchanges) who in anyway harmed market structure. what we have now though, is an old boys club where the buyside ineptitude is forgiven with a pat on the back, and the liquidity provider is penalized for making markets. the current regulatory rhetoric (ie the witch-hunt for hft firms) will only serve to exacerbate problems. my posts here are an attempt to show this.
this quote is pure bullshit. here's why:
a market's VALUE is primarily based on its LIQUIDITY. why? because liquidity REDUCES the cost of trade with smaller bid/ask spreads and INCREASES potential PROFITABILITY by allowing the absorption of larger investments.
but HOW does a market become liquid? a market can only be liquid if trade is ACTIVE. trade can only be ACTIVE if there are a significant number of participants willing to MAKE A MARKET, ie, willing to make SMALL MARGIN PROFITS on the bid/ask SPREAD. by definition, these short term traders provide liquidity for long term traders and enable TRADE to happen at a MUCH REDUCED COST than if long term investors were forced to TRADE with other long term investors.
the more ACTIVE a market it is, the HIGHER it's liquidity becomes, and the more INVESTMENT it ATTRACTS. this is what makes the US markets THE primary stock markets in the world.
wrt to gambling, market making returns are MUCH LESS akin to gambling with their tight risk controls and their balanced value books vs the large directional trades many investors put on. at the end of the day though, everyone should be FREE to put on any type of trade they want within their means. THIS is the definition of FREE MARKETS. the only thing the quotes above serve to do is to UNDERMINE free markets by using emotional rhetoric to favor one market participant over the other WITHOUT REGARD for BASIC MARKET PRINCIPLES.
a final analogy in practical terms, to drive it home... i'm a large investor in physical copper in china, and am going to be warehousing it in a facility and then later resell to local industry as the price rises as i expect. first i need to buy the copper from chile. if it weren't for SHORT TERM TRADERS that were willing to finance the infrastructure of transport and be willing to make the spread between the two countries, then I WOULD HAVE TO DO THAT MYSELF. my costs would SKYROCKET and it would no longer make the investment worthwhile. as a result, i the huge buyer, would not have as a great of demand for copper and the producer would not have as a great of a market to sell into.
THAT is basic market dynamics and can be broken down into smaller and smaller timeframes offsetting the costs and risks of trade and investment as you go down the chain. undermine these basic tenets of trade, and you WILL undermine markets in general hurting EVERYONE.
I thought the whole concept of a stock market was to create a central point for people to buy and sell stocks.
Who are you to tell me how long my investment horizon should be? The gov't already incentivizes me to hold for more than a year with short term vs. long term cap gains taxes.
At what point do you draw the line between trader and investor? How long do I have to hold a position for you to consider me a good guy?
propseeker is a shill for hftscum. Ignore his words.
as I've said before.
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
those lines were just executed faster than you can say " "
as I've said before.
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
HFT is frontrunning
those lines were just executed faster than you can say " "
Who cares if it is?
They are not breaking the law.
The market is all about information arbitrage.
You too could pay the data fees and begin your own front running trading scheme.
They are not breaking the law.
The market is all about information arbitrage.
You too could pay the data fees and begin your own front running trading scheme.