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Clarification From Charles Schumer On Flash Ban
U.S. Senator Charles E. Schumer (D-NY) released the following statement regarding SEC Chairman Mary Schapiro’s confirmation that she is seeking action on “flash trades,” pending the full Commission’s approval and a public comment period:
"We of course expect the SEC to follow its procedures for the implementation of this new rule, but there is every expectation the Commission will vote for it. The bottom line is, this practice will be eliminated."
--Senator Charles E. Schumer
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Mr Schumer, Mary...."toxic liquidity/dark pools"....you have cured a symptom ....how about the disease?
Crime is the disease
Cobretti, I mean ZH, is the cure
Sorry, couldn't resist
Flash trades have little, if any, relation to "toxic liquidity/dark pools"
You are killing the mood! There is a CONSPIRACY here, run with it!
I really wish the SEC could do some original investigative work themselves that leads to a change in regulation that they initiate... rather than simply reacting to what is put before them... they certainly are not a dynamic, nor especially intelligent organization... they seem to spend the majority of their time out-maneuvered by someone or something.
Pending approval and public comment period.
And what about in the meantime?
They can ban shorting in an instant but not this?
Your Shorts!!! Bring out your shorts!!!
Old Day Trader: "I'm not short."
The FED: "Err... he says he's not short."
Goldman Sachs: "Well, he will be soon."
Old Day Trader: "I'm feeling long SPY."
GS: "No you're not, you'll be stone short in a moment."
The FED: "Well, I can't take him like that. It's against regulations"
Old Day Trader: "I don't want to go all-in cash."
GS: "Oh, don't be such a baby."
The FED: "I can't take him."
GS: "Oh, do me a favor."
Old Day Trader: "I think I'll go long in PM."
GS to Old Day Trader: "You're not fooling anyone, you know."
Old Day Trader: " I feel happy. I feel happy."
The FED hits Old Day Trader with a an abrupt change in monetary policy.
GS: "Ah, thank you very much."
The FED: "Not at all. See you on Thursday."
GS: "Right."
That must be Lloyd Blankfein?
How'd you know that?
He hasn't got shit all over him!
Plus, I would like to know who approved it, and what procedures/methodologies/hearings were used. If they approved it without the above, they can eliminate it today.
Exactly!
Feel free to peruse www.sec.gov and do a search. This did not just happen one day...
True, but the SEC did put Goldman's SLP program in place effective immediately without a notice and comment period. If Goldman gets guidance ASAP, why shouldn't Senator Chucky S?
Very true. If the SEC feels it is appropriate, they can issue temporary guidance that is effectively immediately without a notice and comment period. Along with a proposal of the identical rule as final guidance, that becomes effective after the notice and comment period and hearing (if any).
This is nothing more than a fucking game show for the general public ... They know they are gonna lose in the next elections, and they know that they have to do something to remain in W.DC ... i don't believe nothing they say, and the latest game that is being played is the one between Rahm, Issa and the dude from Arizona ... and the SEC will " vote " on this as long as they can so they present themselves to the public as if they actually have some power ...
Mary is fronting for her masters. Make no mistake,
the brokers(government sax) that pay her, however indirectly, control her actions. She's a liar.
so now the russian hedge funds and the Antiguan hedge funds and the israeli hedge funds can now relax and not worry about front running by the goldman sachs squid. there is no honor among thieves. thank you chuckie for looking out for your boys.....
Goldman couldn't care less about banning this stuff ... they are already focused on their next scheme ... Climate exchange and trading carbon credit .... they have been setting the grounds based on blatantly un-true fairy tale of global warming since mid-90s ... and to them that cash cow is worth app. 2 trillion a year so they don't even break a sweat about this ...
precisely
PM, have you seen the ownership structure of the Climate Exchange ... check it out ... http://epa.gov/performancetrack/members/downloads/CCXteleseminarPresentation.pdf
http://warofillusions.wordpress.com/2009/03/30/obama-maurice-strong-al-gore-key-players-cashing-in-on-chicago-climate-exchange/
http://www.klamathbasincrisis.org/globalwarming/gorestrongobamaclimatechange033109.htm
http://www.altenergystocks.com/archives/2007/01/goldman_sachs_and_climate_exchange_plc_lsecle_1.html
http://www.energyrisk.com/public/showPage.html?page=430843
http://www.freerepublic.com/focus/chat/2086494/posts
Goldman has bipartisan support for their carbon emmisisons trading, for example Senators Boxer and Ensign.
It is a strange world we live in when the people fighting GS' carbon trading are regarded as extreme left (Dorgan and Sanders) or extreme right (demint and inhofe).
that's the kind of game they play ... since they have no valid argumentation to support global warming, they discredit and marginalize the people who oppose them with name calling and funding their political opponents when the election time comes ..
Finally something I know something about. Thirty years of global satellite temperature measurements and EXACTLY .001 degree C. warming to June of 2009. Remember these multi-million dollar thermometers have been flying since before global warming was an issue. Meanwhile Hansen at NASA GISS still measures temperatures in parking lots and actually adjust these temperatures up further. Google UAH MSU Global Temperature Anomally June 2009 if you don't believe a stupid cat!!
Since ground meteorology stations went electric they have been placed mainly near building, on rooves and many are near car parks. The heat island effect is real. Plus places that have been irrigated that were dry are now heat sinks and show up warmer. The data is dodgy but debate is frowned upon.
Piss on Schumer. GS already made their nut this year. Schapiro is Goldman's bitch.
Zero, you see this shit?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJfOjIa3pTL8
What good does it do to fine the present stockholders? The fines should go to the people who pulled this crap.
Still avoiding the question of whether it was illegal in the first place. - Pitchforks
You might also want to look into the regulation that prevents US indices from ending the day in the negative. This is *^%@%# unreal!
The new GOLDMAN CREEDO--
STEALTH WEALTH:
--"Steal from the Taxpaying Masses, just don't show them what you are spending it on"....Suck it up and fly commercial until this thing blows over and we have taken over the country...
http://www.marketwatch.com/story/the-8-point-goldman-socialist-manifesto...
did HAL / WOPR wake up 15 minutes prior to market close?
Tried to find a post where this comment may be more relevant but I failed.
Can anyone explain what the hell is going on with GGC?
http://www.reuters.com/article/governmentFilingsNews/idUSN0413151520090804
http://www.google.com/finance?q=ggc
Based on my read these shares should be nearly worthless, not +250% from 5days ago close....
How can I find out about those moves in advance. I'm trying to get in on risk-free money by the boatload.
15% shares short = squeeze.
Their earnings were supposed to be released an hour ago but I can't find... Guess someone got word they're still solvent?
They restructured debt and amended credit agreements last week. So, no BK - at least in August. And you're left with no more stock sellers, and lots of shorts to cover/bought-in.
Public comment is hereby solicited as to whether front-running and officially sponsored theft on a colossal scale should be impeded. Somewhat. Temporarily.
well, check this out:
" Aug. 4 (Bloomberg) -- American International Group Inc., the insurer rescued by the U.S. government, will release second- quarter results without a conference call this week as Chief Executive Officer Edward Liddy prepares to step down."
Seems we can't stop Chucky Schumer's mouth from front running.
Don't get me wrong, flash trading should totally be banned it's just that this blowhard's prematured exclamations are not helpful.
$4 MIL -> $0 < 1 YEAR.
Gotta feel kinda sorry for the determined shorts who blow up...
"I shorted 500 ES contracts at 1003.75 today. Possible target is around 935. This is more like a short term trade and the only opportunity I have to recover, as I expect this move to happen in days."
http://xtrends.blogspot.com/2009/08/lightening-doesnt-strike-more-than-o...
Turned $350K into $4 mil in six months. Turned $4 mil into 0 in about 5 months.
Greed is not good.
Nice job...
July 15: Denial
July 20: Anger
July 27: Bargaining
July 31: Depression
August 3: Acceptance
September 3: Truth
October 3: Survival
January 3: Triumph
p.s. I doubt it's a diligent practice to evaluate returns on bi-weekly bases.
Touché Comrade, persist in your ass-kicking ways.
Tyler, would you be interested in what Irene has to say?
“Unfortunately, flash trading gives a bad name to high- frequency trading,” said Irene Aldridge, author of “High- Frequency Trading: A Practical Guide to Algorithmic Strategies and Trading Systems.” “Most high-frequency trading has nothing to do with flash orders, so it’s going to continue as business as usual.”
Tyler D,
Good work on this one. I think you are the real reason why this issue even came about in the first place. I don't usually post here but I thought I'd come by and say good work. Just shows how successful your blog has become.
Michael
This sounds a lot like it is coming from someone running for reelection very soon....
http://www.opensecrets.org/politicians/summary.php?cid=n00001093
"We of course expect the SEC to follow its procedures for the implementation of this new rule, but there is every expectation the Commission will vote for it. The bottom line is, this practice will be eliminated."
--Senator Charles E. Schumer
"We of course expect the SEC to follow its procedures for the implementation of this new rule, but there is every expectation the Commission will vote for it. The bottom line is, this practice will be eliminated."
--Senator Charles E. Schumer
Hello.... if anyone is reading...
The M$M keeps referring to Flash Trading as a "sub-set" of HFTPs, but I would argue the correct phrase would be, Flash Trading is a function, among thousands of funtions, of an HFTP.
Please correct me if I am misunderstanding something...
nope, you got that right, its just one of components of HFT, but nevertheless, a significant one ...
stupid lag....
to begin with, how do they expect to implement this ban? also, why a need for public comment..flashing is primarily used for frontrunning and is illegal. the 'public comment' they will seek from the banks is to excavate exactly which uses of flashing are legal (and useless) and use this to justify preserving the infrastructure (colocated servers) making flash orders possible. that'll take like a year.
after that's accomplished, the banks will simply then get onto a cat and mouse game where they continue to flash regularly for 'legal purposes' but then , when the occasional liklihood of getting caught is very low, they will use it to frontrun outright. of course the sec will prosecute ocassionally and the guilty banks will settle without admitting guilt for 33,000$.
a simple solution, like eliminating colocation altogether, , that was implemented with a BRIGHT LINE and with expediency would send a message to the market that cheating, nor the appearance of cheating, will be tolerated. this would deter other scammers.
but no, this isnt how things work. beauracracy will provide appropriately balanced regulation by providing a time for public comment so that the public itself gets ripped off. at times like these, beauracracy will be the wrench in the wheel that destroys this country. people talk about balancing the interests of different parties, and yet the average joe on the street is not going to care how well the government tries to balance the interests of goldman with those of the mutual fund industry and retail investors.
this careful ballet balancing act will topple over eventually.
Exactly. It's just another dog and pony show.
Not how Melissa Lee immediately equates Flash Trading with HFT in order to obfuscate the issue.
Hate to rain on the parade, but didn't Matt Taibbi write in 'The Great Takeover' about the EU threatening tough regulation:
'The situation worsened in 2004, in an extraordinary move toward deregulation that never even got to a vote. At the time, the European Union was threatening to more strictly regulate the foreign operations of America's big investment banks if the U.S. didn't strengthen its own oversight. So the top five investment banks got together on April 28th of that year and — with the helpful assistance of then-Goldman Sachs chief and future Treasury Secretary Hank Paulson — made a pitch to George Bush's SEC chief at the time, William Donaldson, himself a former investment banker. The banks generously volunteered to submit to new rules restricting them from engaging in excessively risky activity. In exchange, they asked to be released from any lending restrictions. The discussion about the new rules lasted just 55 minutes, and there was not a single representative of a major media outlet there to record the fateful decision.
Donaldson OK'd the proposal, and the new rules were enough to get the EU to drop its threat to regulate the five firms. The only catch was, neither Donaldson nor his successor, Christopher Cox, actually did any regulating of the banks. They named a commission of seven people to oversee the five companies, whose combined assets came to total more than $4 trillion. But in the last year and a half of Cox's tenure, the group had no director and did not complete a single inspection. Great deal for the banks, which originally complained about being regulated by both Europe and the SEC, and ended up being regulated by no one.'
I hope this isn't just a pill to calm the masses.
Be vigilant and don't trust the SEC or the government.
I hate Chuck Schmuck...let's make him go away. Goldman please make him an MD so he can continue steal with transperancy!
From Joe Ratterman, one of the original opponents of flash orders:
Misstatement 1: Flashed orders create unique front-running opportunities.
Misstatement 2: Flashed orders are used solely by high speed trading firms.
Misstatement 3: Flashed orders disadvantage retail investors.
Misstatement 4: Exchanges intended to flash quotes solely to their own members.
It needs to be said again - there are valid reasons to review, debate, and even ban flashed orders. I listed six of those reasons in our last newsletter. It's equally important to make clear, however, that there are accusations being circulated recently that are distorting the perception of how these systems actually work. The difference between the real concerns and the hype may be difficult for people outside of our industry to discern, so we felt it was important to shed some factual light on this topic.
There is grave danger in allowing misstatements and myths to perpetuate, and I hope that we have been able to clear up some of the confusion here.
http://www.advancedtrading.com/exchanges/showArticle.jhtml?articleID=218...
For any of the grownups left in this room, please have a look at Nina Mehta's coverage before choosing the next best step. (http://www.tradersmagazine.com/issues/20_296/-103978-1.html?pg=1) Excerpt below.
The Quote Rule
The SEC is carefully tracking the flash issue. David Shillman, an associate director at the Commission's Division of Trading and Markets, said at the SIFMA conference that flash orders lasting less than 500 milliseconds fall within an exception to the Quote Rule, or Rule 602, in Regulation NMS. The Quote Rule requires all market centers to publicly disseminate their best bids and offers through the securities information processors. The exception is for orders that are immediately executed or canceled.
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However, the SEC's thinking on this issue isn't settled and may be re-examined, Shillman said. "It's an open question as to whether the Quote Rule should be modified, whether it is really necessary to have that [exception] in the electronic world," he told the SIFMA crowd.
This is the rule at the heart of the issue
The exception enables the flashing that is described in the MSM (only the chosen can see some bids/offers on some exchanges)
AND
it covers the IOC activities that effectively allow dummy offers to be posted and withdrawn in an effort to discover and execute at the highest limit order price, rather than NBBO.
Shumer's ban would only cover the first (lower impact) instance and do nothing about the second (which is more pernicious and lucrative)
Also, Shumer's issue helps his NY based exchange constituents at the expense of non NY players, while the second has no political benefit to him since it will impact all algo traders equally regardless of their home base. In fact it might be net harmful to his constituents.
The SEC on the other hand needs to resolve both issues with the one rule change, so their irksome response to his preannouncement of their intentions is understandably ambiguous and not necessarily (although possibly) an indication that they won't follow through.
Shumer isn't, and never will be a hero. Delude yourself at your own risk.
Good post, thank you!