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Bank of America Now Proudly Exporting HFT Market Death And Destruction To Asia

Tyler Durden's picture




 

Feel like it is time to spread the market annihilation love courtesy of "any minute now" HFT-induced flash crashes? Have no fear, Bank of America is here. "High-frequency trading in the US and Europe has grabbed most attention in the market, but similar activities are quietly taking off in Asia as well." Thusly begins a pamphlet by BofA/ML's Carrie Cheung which explains the tremendous "advantages" that HFTs offer to any local market. Not mentioned is that these advantages include drastic market destabilization, and that the "attention" is of the "get that thing the hell out of here" variety. At least we get to learn some very useful facts about the proliferation of the little bloodsucking algos in the Pacific rim such as...

  1. "high-frequency trading firms today account for about 20-25% of the TSE turnover - ZH translation: the TSE will crash only one third lower when the Flash Crash hits it"
  2. "the market microstructure changes introduced at the same time (i.e. new tick sizes) cut the average spread of Nikkei 225 stocks by 25%, making it much cheaper to trade - ZH tranlsation: in HFT jargon, trade is a synonym for stuff cancelable quotes and/or churn",
  3. "The new platform allows for higher-frequency trading, where algorithms are used to make thousands of trades in milliseconds, thereby allowing firms to profit from tiny spreads and  market imbalances." - ZH translation: we make frontrunning fast and easy, or your Other People's Money back;
  4. "Furthermore, the introduction of co-location services by Japanese exchanges, together with third-party proximity services, further enhances the platform for high-frequency trading firms in Japan." - ZH translation: Cisco stands to make at least one or two cents in incremental EPS by letting the biggest market manipulators frontrun and scalp at the speed of light; judging by its latest results, it needs it;
  5. "It is estimated that  high-frequency trading activity will account for 30-40% of liquidity by the end of 2010." - ZH translation: the crash after the next, will be about half the amplitude of the May 6 crash;
  6. The Kospi Index Option is the world’s most heavily traded derivative. It is highly correlated with the US  markets, has a low transaction cost and hence is heavily traded by retail investors. These elements make it an attractive market for a lot of foreign investors including the highfrequency trading group. - ZH translation: Japanese housewives will first all buy together, then will be all shaken out together, losing all their money at the same time, with just Made in New York Atari making a killing;
  7. China is a market most foreign investors want to access, but the entry barriers are high. However, the recent successful launch of CSI 300 futures will no doubt make it an important market to keep an eye on. The futures contract, while currently limited to just domestic traders, now has the second largest turnover in the world, following Kospi. - ZH translation: we are preparing to blow up the world.

In conclusion, use Bank of America cause their HFT expertise in setting landmines in Asian stock markets is second to none: "Asia’s markets are evolving gradually. In addition, the region’s growing economic power and upgrades in technology will definitely make this the next hot spot for  high-frequency trading."

Full two page ad of BofA exporting WMDs to the Pacific rim:

h/t Joel

 

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Mon, 08/30/2010 - 21:59 | 554221 Stainmaker
Stainmaker's picture

...and I'm still using dial-up

Tue, 08/31/2010 - 04:32 | 554673 Sudden Debt
Sudden Debt's picture

:)

those 56K modems bring back memories :)

TUUT TUUT CRRRRRR TUUT TUUT CRRRRRRRrrrr

BOING!

Timeout!

Mon, 08/30/2010 - 22:08 | 554237 Rusty Shorts
Rusty Shorts's picture

 - it will feel like zombie dick.

http://www.youtube.com/watch?v=QqiqasWe3ps

Mon, 08/30/2010 - 22:10 | 554253 docj
docj's picture

Who says the US of A doesn't export anything anymore!

YAY US!!!

Mon, 08/30/2010 - 22:13 | 554256 Cognitive Dissonance
Cognitive Dissonance's picture

Maybe this is all an American national security exercise where we're secretly trying to export HFT weapons of mass destruction (WMDs) into China. The only way we can get them to take the bait is eat it ourselves and hope we survive long enough for them to become infected.

Once the HFT WMDs spread that far, we shut ours down and watch China light up in an orgy of market self immolation. Then we send in the (Wall) street sweepers to clean up the mess and occupy China to harvest their human crop.

There have been much crazier ideas that have come out of the CIA over the years. I should write a book.

Mon, 08/30/2010 - 22:25 | 554285 Rotwang
Rotwang's picture

You should.

Don't forget the conservation of energy 'thangy'.

When the 'birdbath' has been promoted as the pool of consideration, conservation becomes a whole other matter, when the river and the lake is included.

Cheers

 

Tue, 08/31/2010 - 00:16 | 554470 Hang The Fed
Hang The Fed's picture

If there were some way to translate the export of insanity to the rest of the world into real GDP numbers, I bet the US would see real growth of at least 20% and rising in the near future.

Mon, 08/30/2010 - 22:19 | 554266 Saxxon
Saxxon's picture

China stocks are a SCAM like every other P.R.C scam investment scheme.

Once BofA has established their speed-of-light Ebola virus in the P.R.C. houses, count on the feverish new money to run it up like they ran up their scam empty shopping malls, empty highways, Potemkin Villages and phony phantom-bid art markets.

One other point - the Shanghai and Shenzhen bourses run on a lot less volume than the NYSE - there will be volatility.

Got popcorn?

Mon, 08/30/2010 - 22:49 | 554330 three chord sloth
three chord sloth's picture

Does anybody know if China found their Runaway Banker?

Tue, 08/31/2010 - 00:18 | 554473 Hang The Fed
Hang The Fed's picture

Not only do I have popcorn, I make bloody mary's laced with heroin.  After one or two, the structure of global finance makes PERFECT sense.

Tue, 08/31/2010 - 09:36 | 554928 old_turk
old_turk's picture

Thorazine slurpees do the same thing for me (and much less expensive).

Mon, 08/30/2010 - 22:27 | 554287 drwells
drwells's picture

Good news is, after their markets implode they'll execute some of these assholes.

Mon, 08/30/2010 - 23:06 | 554361 Mactheknife
Mactheknife's picture

+10 LOL, yeah those commies are funny like that.

Tue, 08/31/2010 - 06:13 | 554728 breezer1
breezer1's picture

do you still get caned in singapore for spitting on the sidewalk? their pm exchange is supposed to open on weds.

Mon, 08/30/2010 - 22:36 | 554289 three chord sloth
three chord sloth's picture

Asia's mom tried to warm them about hangin' out with those reprobate friends, but would Asia listen? No...

First they get you to take a puff of some primo fiat stuff... c'mon, just a puff! Then soon you're snortin' that fine fractional reserve marching powder. And before you know it, you're mainlining HFT in the morning and then comin' down at night by buyin' up CDOs. Soon you're in hock to your hedge fund dealer and your dumpin' your assets for another fix... c'mon man, front it to me! You know I'm good for it!

It's an old tale, a sad tale... but kids today, they never learn from the past. You think you kids invented leverage, playin' the margins and the art of the deal? Well, you shoulda seen your grandma and me back in the twenties... whew, we knew how to party. We thought it would never end, just like you.

Kids today... kids today...

Mon, 08/30/2010 - 22:42 | 554320 fuu
fuu's picture

I learned from watching you Dad!

Tue, 08/31/2010 - 00:01 | 554435 hamurobby
hamurobby's picture

De-evolution, they will assimilate,

Watch the whole video, you will be amazed.

http://www.youtube.com/watch?v=VntFEWF8I8A&feature=related

Tue, 08/31/2010 - 11:14 | 555190 downrodeo
downrodeo's picture

Really? Because Korn said so? I can't accept that on face value. The entire concept of an intelligence qualifier has it's roots in the eugenics movement anyway. In addition to that, it assumes the non-existence of other types of intelligence that may not be quantifiable in the traditional sense, yet may have value nonetheless.

http://en.wikipedia.org/wiki/IQ

http://en.wikipedia.org/wiki/Intelligence

 

 

Mon, 08/30/2010 - 22:30 | 554293 MarkS
MarkS's picture

It is actually worse than you think.  Singapore is actively courting HFT firms.  Tokyo Exchange has met with a handful already.  Everyone thinks that increased 'liquidity' means the maturation of their exchange and it makes them a player in growing the region. 

Very few if any understand the ramifications as this goes cross border and the exchanges become inter-linked thru baskets of similar securities...

Mon, 08/30/2010 - 22:31 | 554294 suteibu
suteibu's picture

The Nikkei225 is down 2.3%.  Whoever is front-running today is running downhill.

Tue, 08/31/2010 - 02:51 | 554630 molecool
molecool's picture

See - it's working already!

Mon, 08/30/2010 - 22:34 | 554300 Tense INDIAN
Tense INDIAN's picture

bring it on ...i love FLASH CRASHES

Mon, 08/30/2010 - 23:14 | 554375 StychoKiller
StychoKiller's picture

Deeper plunges!  Higher G-forces!  What's not to like?!

Tue, 08/31/2010 - 04:34 | 554674 Sudden Debt
Sudden Debt's picture

Yesterday I did some Flash Fucking.

In and out in 30 seconds!

Who says you need cuddling!

Mon, 08/30/2010 - 23:36 | 554410 anvILL
anvILL's picture

Right after the Arrowhead started moving in Tokyo...

Mon, 08/30/2010 - 23:55 | 554433 Clayton Bigsby
Clayton Bigsby's picture

That's fabulous - cock, meet asshole - asshole, meet cock

Tue, 08/31/2010 - 02:51 | 554631 molecool
molecool's picture

Let me introduce you both to my good friend vaseline.

Tue, 08/31/2010 - 00:02 | 554444 Rick64
Rick64's picture

 First democracy and freedom, now HFT. Wow we sure are a generous and giving country.

Tue, 08/31/2010 - 01:59 | 554587 Incubus
Incubus's picture

We give our jobs away, too!

Tue, 08/31/2010 - 02:50 | 554629 molecool
molecool's picture

Except that in China HFTs flash crashing the market get strapped to lamp posts on their balls.

Tue, 08/31/2010 - 03:16 | 554641 Moonrajah
Moonrajah's picture

Uh-oh! I think the Chinese should start looking out for local traders with fat and slippery fingers.

Tue, 08/31/2010 - 03:23 | 554646 Coldfire
Coldfire's picture

So HFT may corrupt Asian markets? How will we be able to tell?

Tue, 08/31/2010 - 03:51 | 554658 Tense INDIAN
Tense INDIAN's picture

that crook George Soros bought some percentage of BSE a few days ago...God knows what he is upto

Tue, 08/31/2010 - 04:28 | 554672 alicea
alicea's picture

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Tue, 08/31/2010 - 06:45 | 554737 williambanzai7
williambanzai7's picture

Aren't you glad we TARPed them.

Tue, 08/31/2010 - 07:18 | 554754 mephisto
mephisto's picture

Tarpet bombing?

Tue, 08/31/2010 - 07:21 | 554759 prophet
prophet's picture

Freqing bitchez.

Whats next FX? (or is that where they originated?)

Tue, 08/31/2010 - 12:33 | 555390 sheeple
sheeple's picture

Exporting banana republic to asia!

Wed, 09/29/2010 - 07:13 | 612156 Herry12
Herry12's picture

 

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