This page has been archived and commenting is disabled.
Is Chuck Schumer's Market "Activism" Merely A Cover Up For Protecting HFT Lobby Interests?
We were pleasantly surprised yesterday when we saw news that Chuck Schumer was starting a campaign to aggressively rein in the HFT market members (which he correctly categorized as responsible for excessive volatility and the flash crash). Some reading between the lines, however, makes it appear that this action could be nothing but a red herring distraction, which attempts to actually promote the interests of the very same HFT lobby which the senator is presumably attempting to control.
Here is how the press release was titled: “SCHUMER TO SEC: IMPOSE
TOUGHER RULES ON HIGH- FREQUENCY TRADERS TO CURB STOCK PRICE VOLATILITY
AND PREVENT ANOTHER FLASH CRASH” http://schumer.senate.gov/record.cfm?id=327160&
We hadn’t seen much from Sen. Schumer on the high frequency trading
debate since last summer when he proposed banning flash orders (which by
the way still exist). So, we were pleasantly surprised to see Sen.
Schumer jumping back into the fight…or so we thought.
Once we started reading Sen. Schumers letter, it started to feel like
we had read this before. Sen. Schumer believes that any market
participant making markets in 25 or more symbols should be subject to
market maker obligations. He suggests 4 areas that the SEC should focus
on:
1-Best price obligation – require market makers on the NBBO for a certain percentage of time
2 -Maximum quoted spread – quotes should be within the triggers of circuit breakers and stub quotes should be eliminated.
3- Depth obligation – require market makers to place orders below the NBBO
4 – Uniformity across trading venues – market maker obligations should be consistent across all exchanges and market centers.
Hmmmm, now where did we read this before? Oh thats right, on July
9th, three large high frequency trading participants (GETCO, Virtu and
Knight) sent a letter to the SEC which was almost exactly the same as
the Schumer letter (http://sec.gov/comments/s7-02-10/s70210-255.pdf).
In their letter, they also call for a set of market maker obligations.
They propose amongst other things a Best Price Obligation, a Maximum
Quoted Spread and a Depth Obligation.
Sen Schumer though goes one step further in his letter. He says that since his proposed ”obligations are burdensome and making markets is voluntary, the Commission should consider appropriate incentives for high frequency traders to become market makers.”
What a disappointment. We thought that Sen. Schumer was going to try
to help fix our fragmented market structure. But he appears just to be
asking for more incentives for HFT. We guess that access to direct
data feeds, access to data centers where they can co-locate their
computers, liquidity rebates and a share of market data revenue are not
enough incentives for Sen. Schumer and his HFT friends.
»
- 4624 reads
- Printer-friendly version
- Send to friend
- advertisements -
Figures, can't trust that sleazy slime ball.
oh, let's all grow up, OF COURSE IT IS.
Q: "Is Chuck Schumer's Market "Activism" Merely A Cover Up For Protecting HFT Lobby Interests?"
A: Yes
Why? Come on, it's a repeat of 2 years or so ago when he proposed taxing the hedgies and private equity folk like ordinary human beans. Then after all the lobbying (you get the picture) it all disappeared.
Noise made,
Publicity and sound bites elicited,
Payoffs made,
Nothing done, nor press reports,
Problem solved.
Business as normal, move along nothing to see..
you risk your life if you are between ol' Chuck and a microphone/camera pair.
- Ned
Excellent post. Schumer is the master of diversion.
indeed he is the master if diversion, anyone who thinks he is acting any any ones insterest except his own and his handlers is sadly mistaken. Just looking at this douchbag makes me feel physically ill. My post on the topic from yesterday:
"Scumbag Schumer is just trying to covert his arse when this whole thing blows up. Its more evidence we are getting close to the end as the bankster elite, of which Scumer is most certainly one, realise the game is almost up. When the lynch mobs come for him he can say "look, i tried to stop it" while he has supported and profited from all the crooked behaivour and abuse on wall steet for years.
Scummer is a dual allegiance, israeli firster, zionist, traitor"
Easy to solve... Any quoted price must stand for 5 seconds.
+5
Agreed. There is no legitimate trade done in 1 millisecond that can't be done in 100 (being charitable). Liquidity would still be maintained with reasonably tight B/A spreads.
All this talk about staying close to NBBO is total red herring, as are the recent circuit breakers. limited to 10% in 5 minutes? Don't make me laugh. May 6 didn't even drop that fast. It prevents nothing, just sounds like it does.
Of course he is a front man. What do you expect from SchumDrum ?
Schumer's a douchebag.
Aren't the HFT's effectively already "market makers" of a sort?
Dark, good to see you again.
I'd always understood that MM was charged by the "exchange" to keep an "orderly market."
but flash-crash had an instant with $0.01 bid was hit; I'm just a dumb grunt, but I think that a'int no market.
so, no, I'd say they aren't doing the MM function. oops-I stand corrected in front of all ZH'ers: they are doing the Money Making function. Got it.
of course, ol' Chuck (who is striking for Joe Bite-me's job as gaffe King) said this about IndieMac:
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aAYLeK3YAie4
I've watched him enough to think that this was not entirely accidental. After all, Soros had the Brits call no mas on him back when.
- Ned
Ned...good to see you as well.
Yep, I'd definitely agree, in as much as my limited knowledge and even more constrained appreciation of economic theory allows me... You hit it exactly, my thought went more to what I understand as a ZeroHedge claim, essentially the quants, computers and HFT's artificially/illusorily generate the appearance of liquidity through micro-second manipulations. So de facto, they seem intuitively as market makers, in that they function as driver of the trades/liquidity that make a market.
But of course this from a recovering attorney enrolled in "AA", attorneys anonymous...who's thinking of going back for a PhD. Certainly not in economics though!
Schumer is one of the biggest douche bags that has ever held public office. If he's doing anything, there must be something in it for him.
The charade must continue. Any perceived revenue generating event which makes its way into New York State/New York City coffers is a win. How much tax revenue can you generate from New York State extra sharp cheddar cheese? A percentage of any fleecing of Main Street finds its way to the politicians. Schumer will find a way for that to continue.
Right now the different regulatory agencies of the great state of NY are having a field day with small business, in terms of inspections, fines, and licensing/administrative requirements and deficiencies.
It'd be cheaper just to pay the state or Schumer some protection money, rather than get nickel'd and dime'd by every local inspector and office looking to justify its bloated budget and paycheck (which on average is higher than the average resident's).
+1
I saw this in Rochester and Ithaca over the last 6+ years.
the idiots put up the toll on NYT, and then NY 7 is turned to rubble, and the total system cost goes up.
pay the vig.
- Ned
He is also a friend of hedge funds who may be looking to usurp the investment banks given all the public outrage, politicians, Federal favors. In my opinion they are looking to cash in on the demise of partially nationalized TBTF. Schumer is simply setting picks to take away weapons from the big desks arsenal.
http://www.washingtonexaminer.com/politics/Schumer_s-racket_-Lobbyists-a...
Back in 06, I found myself between chuck and a television camera.
Ok I'll bite. How did you make it out alive - or did you?
I didnt post yesterday since I thought it was obvious. Schummer is attempting to put credibility back in the market by making these headlines. There is no intent on stopping the HFT. Schummer is trying lure retailers back into the market (12+ months of outflows?). The HFT needs retail money as fuel.
edit: the HFT cant be stopped. It can't be reasoned with, it can't be bargained with...it doesnt feel pity or remorse or fear...and it absolutely will not stop. Ever. Until you are broke.
I'll buy that for a $1.00. Oh wait 1.01. Shit 1.02. Fuck 1.03.
Fahgetabout it.
quality
We all know Chuck Scooper is a criminal and corruption is his only offering to society. Between Scooper Pooper and Barney Fife how much do you think they have stolen from the taxpayer???
Schmucker can sing the notes that are fed to him as well as anyone. What a great front man!
Say is ain't so Tyler, say it ain't so. Another double crossing slim ball Senator who spins the wheel to make it look like he's helping the slaves while actually handing the slave owner another whip? Oh the inhumanity. Shot through the heart.
I guess it's time to start sending GOM poisoned dead fish to another congress person. Marge, looks like we have number 419. Put Schumer on the dead fish list. Man, I wonder if I could get a volume discount from UPS? The post office ain't cutting me no more slack after that truck broke down for 3 days in New Mexico.
"Another double crossing slim ball Senator who spins the wheel to make it look like he's helping the slaves while actually handing the slave owner another whip?"
Can you be more specific? I can't figure out which senator you are referring to.
Doomed. This country is Doomed.
Everyone "Political" is For Sale.
How dare Zero Hedge question Shroomer's patriotism.
Let the exchanges charge per order (filled or non-filled) and the problem will solve it self.
Yes. Chuck Schumer is a slime ball. He should be jailed for insider trading.
Mr. Chunk, that would be an excellent outcome, but unfortunately Congress is exempt from prohibitions on insider trading, just as they have exempted and distanced themselves from the very laws they pass to subjectgate their nominal constiuents and heap profits on those they actually represent.
http://www.opensecrets.org/politicians/summary.php?cid=n00001093
don't be naive, remember who pays more gets the _service_
this crook is at least as dirty as the other prostitutes
lobby = legalized corruption
"We were pleasantly surprised yesterday when we saw news that Chuck Schumer was starting a campaign to aggressively rein in the HFT market members (which he correctly categorized as responsible for excessive volatility and the flash crash). "
Why do people hate free markets?
How much volatility is excessive? If volatility is bad, would it be best to have no volatility, i.e. would it be best if the government passed laws fixing the price of stocks?
Should the people who buy at the bottom of a "flash crash" be rewarded with financial gains for their insight? And should the people why initiate a flash crash be punished with financial losses for their erroneous appraisal? Or should the trades be reversed to prevent the terrible effects of "excessive volatility"?
There is no such thing.
Possibly no limit.
No.
Sure, unless they caused the flash crash and profited therefrom.
No, but see above.
"Sure, unless they caused the flash crash and profited therefrom."
For someone to profit by causing a flash crash, then someone else must have incurred losses.
If you watch the market every 5 milliseconds, try to outsmart innumerable market participants in a childish mathematical game with no basis in fundamentals, give in to fear or peer pressure, and then incur huge losses, then whose fault is that?
If I analyze and appraise a stock at $30, and the market value suddenly drops to $10 in 5 seconds, then why would I sell it at a price I believe to be too low? I would keep the stock because I value having it more than I value having $10. If I do sell it, whose fault is that?
is this some sort of a highly sophisticated sarcasm or just plain naivety ?
Well, it was a bunch of rhetorical questions. But surely you got the gist of it.
Do you see a flaw in my reasoning?
Why should the government stop a "flash crash"-causing HFT? Should it be stopped to protect you - because you aren't able to control your own choices in buying and selling stocks? Even if a flash crash occurs you own exactly as many stocks as you did before.
I would think an HFT that acts this way would present an excellent profit opportunity. Why not prove that the HFT causing flash crashes is wrong by taking away its capital and relegating it to a position in the market where it can't affect anyone any more?
If you get your wish, and flash crashes are prohibited, then you may find yourself in a situation where you can't get rid of a stock because the lowest price you can legally sell it at exceeds what anyone is willing to pay.
Chucky Baby collects high bribes, I mean, contributions from this industry so why would he do ANYTHING to regulate it? This is the same man who has a staffer who called me a liar when I pointed out a Rasmussen poll citing 80% of Americans want the Fed audited. She said i can make numbers up too. She is right, I understated the number, it is up to 85%. Point being is if he employs people who calls a constituent a liar how can you trust the man himself?? YOU CAN'T! He is scum.
Schumer should not regulate it. Unless there are violations of one's property - e.g. rape, murder, theft, or fraud - then the government has no legitimate purpose interfering. And I personally have never been raped, murdered, mugged, or defrauded by a HFT - even one that foolishly disgorges its assets at fire sale prices.
And I do not think the Fed should be audited. We already have the Coinage Act, under which people who debase the currency are supposed to be hanged. In other words, why pass more silly laws when we don't even follow the existing ones? I think we should try allowing actual freedom: e.g. the freedom to privately mint and to exchange gold and silver coins. The freedom to not have one's gold be confiscated by presidential decree.
Schumer must be gunning for Dodd's spot.
Joe Saluzzi of Themis, Chris Martenson, Hugh Hendry and Tyler are among my non musical heroes - people I'd love to meet and have a beer and chat with.
(For those interested, my musical heroes include Robert Fripp, Hugh Hopper and Jaco!).
DavidC
Why don't you ask David Fiderer?
I think that with HFT and their constant Frontrunning of trades that they are systematically taking money out of the Market. Penny by penny. As they take Money out of the Market there is less Money left in the Market and anyone holding long term will little by little lose their principal.
The Market in my opinion is designed to continuously take Money from Investors and transfeer it to the Big Banks. Penny by Penny until the Big Banks have all of the Money in the Market and anyone that has "invested" loses it all, or at least 95% of it.
Watch the Market except for the Biggies like Aapl, Amzn, etc. You know the stocks every other stock is slowly sinking into the Sunset. Lower highs, lower lows and forget pennie stocks (thoes under $5.) they will never let them go up. They have shorted them into the Basement and have the money from their shorts and will never cover until the Companies go under.
Designed destruction. Just like 2008.
Also, like would you take a Million Dollars or a Penny and have the amout double every day for 10 years.
Which would you take? Most people would take the Million but with the penny doubling every day for 10 years it adds up to many Millions.
Welcome to HFT and the slow calculated theft from 401K's, Pensions, and the average "investors".
Chuckie was all over the journal today. Must be friends with murdoch or somethin'. And they put in a nice drawing of him. His nose should be even bigger, like Pinoccio's. Schemer is a better name for that louse(4.Slang . a contemptible person, esp. an unethical one.) And now I read he is at it again "working" in an underhanded manor, to say the least, running the senate by himself!
http://tinyurl.com/23quq3x (from the WSJ)
The real question is why is anyone surprised by a crook doing something crooked? That is their very nature.....
Mr. Chuck as a Chosen one will clean up this mess! No doubt about it!