Swift Trade Securites-Downtick rule
- Thread starter FmrRetailGuy
- Start date
Thanks for the support MACD_addy. What's the big friggin deal with shorting (on a downtick) ? Look people, even if we don't have a bullet, all we are doing is using somebody else's. We trade for the Swift Trade the firm. They got lots of bullets that cover many different stocks. The SEC is too busy with Enron, Martha, and the Regis family to care about a small canadian daytrading firm. My two cents says this is all going to blow over and it's business as usual.
Daywalker, since as you stated in an earlier post you have only be doing this(prop.) for 3 months I'll assume that you haven't given this much thought. But think about this;
as you say Swift may have many bullets on many stocks. But with the number of traders they have and, the fact many trade the same stock, and the likelihood you are all going in the same direction at the same time, add to that the fact that many traders are trading large share defaults, and I think the probabilities are pretty high that you've got some illegal shorts!
Hey what do I know though....? I could just be talking out my ass.
The SEC is too busy with Enron, Martha, and the Regis family to care about a small canadian daytrading firm. My two cents says this is all going to blow over and it's business as usual.
Don't be so sure about that dude. They already got caught once with their fingers in the cookie jar on the' wash trade' thing.:eek:
From my experience we are talking about serious illegal shorts, people. I remember trading worldcom several months ago, and they enouraged us to short it. A) its unshortable at the price it was (80ish cents, then high teens) B) No one had bullets on it. And the positions were massive.
I recall looking at the trader next to me to see a position of 120,000 short. And sometimes a trader is in these positions for up to an hour when the volume is down. Why is it a rule? Because the SEC and NASD has determined its a good idea to protect people from hammering down stocks. Especially when we are talking about penny stocks.
Believe it or not, the NASD and SEC can actually handle more than a few cases at a time!!! The SEC phoned SwiftTrade when I was there, because one trader had been trading a 1 share default and SOESing MM's to piss them off. The MM phoned the NASD or SEC and complained about it. This kind of stuff happens all the time, and believe me, they know about it. How do you think ST got caught on those wash trades? Check this out....for a while, when Island was trying to finish the Instinet merger, Island wanted its volume boosted. So, they offered ST liquidity rebates of 2.00 while they charged ST 1.90 for taking liquidity. This was only for a number of months, but it was a window of opportunity. So imagine, ST trading the QQQ's, wash trading millions of shares on Island while gaining that tenth difference in liquidity rebates. To make it worse, they apparently had the system semi-automated by the time NASD caught them.
I recall looking at the trader next to me to see a position of 120,000 short. And sometimes a trader is in these positions for up to an hour when the volume is down. Why is it a rule? Because the SEC and NASD has determined its a good idea to protect people from hammering down stocks. Especially when we are talking about penny stocks.
Believe it or not, the NASD and SEC can actually handle more than a few cases at a time!!! The SEC phoned SwiftTrade when I was there, because one trader had been trading a 1 share default and SOESing MM's to piss them off. The MM phoned the NASD or SEC and complained about it. This kind of stuff happens all the time, and believe me, they know about it. How do you think ST got caught on those wash trades? Check this out....for a while, when Island was trying to finish the Instinet merger, Island wanted its volume boosted. So, they offered ST liquidity rebates of 2.00 while they charged ST 1.90 for taking liquidity. This was only for a number of months, but it was a window of opportunity. So imagine, ST trading the QQQ's, wash trading millions of shares on Island while gaining that tenth difference in liquidity rebates. To make it worse, they apparently had the system semi-automated by the time NASD caught them.
are the traders liable for a fine on this?and maybe barred from trading again by the sec?sounds very dangerous to me.
I don't think so. The NASD can take away Swift's license, though and all those kids will be on the street. Poor spoiled kids who think that they are great traders because they make 20--40K's a month will go to IB or anywhere else and blow their accounts within a couple of days because they are, in fact, just monkeys. Not all of them but most of them.
Grim picture, huh?
Im not really sure about liability in this case. Supposedly signing the form is supposed to shift some of this liability to the traders. I suspect in court that these forms wouldn't stand for a minute, considering ST's software was purposelly modified to allow the illegal short selling. I cant see a judge or NASD arbitration leading to anything serious for the traders, but there are always those out there that feel that making an important precedent is as important, if not more, than direct punishment for the crime. It would be awful for these kids if the NASD barred them from trading for a number of years though.
More practically though, if the firm does go down, its not a necessarily good firm to have on the resume. The reputation of ST seems to slowly get worse, mainly from word of mouth, but I guess we will hear about the conclusion to the NASD arbitration hearing at some point soon. Does anyone know how ling this takes? What is more important to the average trader (prop) for them is to ask yourself 'if this firm goes down, do you want to be associated with them'. The answer for me was no.
More practically though, if the firm does go down, its not a necessarily good firm to have on the resume. The reputation of ST seems to slowly get worse, mainly from word of mouth, but I guess we will hear about the conclusion to the NASD arbitration hearing at some point soon. Does anyone know how ling this takes? What is more important to the average trader (prop) for them is to ask yourself 'if this firm goes down, do you want to be associated with them'. The answer for me was no.
You hit the nail on the head. That is exactly why I left. I understand that there is only a handful of retail guys left and that many are now trading prop. How long Swift will last is the real question 
I can tell you from experience, you are looking at 6-9 months of info going back and forth...each side contests everything that the other side requests and vice versa...then they choose up arbitrators, ( always a nice debate their) and then they finally pick an arbitration date that is convenient to everybody...however because of the busy schedules of lawyers conflicting, you have another three to 4 months out just to find the right time...If Arbitration were filed today against Swift, i would say it would not got to hearing until January...of 2004..
Lawyers are a real pain, but when you want to stall and drag things out, they really come in handy
Lawyers are a real pain, but when you want to stall and drag things out, they really come in handy