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The Collapse Of Liquidity Provisioning Since The Goldman SLP Coup

Tyler Durden's picture




 

The HFRXEMN plotted since the time that Goldman Sachs barged on the liquidity provisioning scene with their SLP cover for PT domination. Maybe the NASDAQ should take a look at this and come up with some follow up complaints about what a scam the NYSE's program to gift 5 millisecond latency packet sniffing to 85 Broad truly is.

 

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Thu, 07/16/2009 - 12:46 | 7869 Anonymous
Anonymous's picture

the fed started paying banks to sit on required and excess reserves on oct 6th. the first day after the banker takeover bill was signed.

http://rattube.com/2009/02/06/dr-stan-monteith-on-alex-jones-tv/

Thu, 07/16/2009 - 12:48 | 7872 Anonymous
Anonymous's picture

Just look at all that value GS is providing. A bargain at twice the price!

Thu, 07/16/2009 - 13:01 | 7878 Anonymous
Anonymous's picture

I'm stupid what does this chart say?

Thu, 07/16/2009 - 13:12 | 7883 Anonymous
Anonymous's picture

Well, I'm not stupid (generally), but yes, this might be a good opportunity for some of our enlightened commenters to chime in.

Thu, 07/16/2009 - 13:15 | 7885 Anonymous
Anonymous's picture

that index has three tiny funds in it, meaningless to draw any conclusions.

Thu, 07/16/2009 - 13:24 | 7893 Anonymous
Anonymous's picture

Five milliseconds? That would be a wee bit egregious.

Perhaps Intel, IBM, etcetera, could have a go at HFT.
Or, perhaps there is a manner in which they could earn
a percentage for providing the best-in-speed-breed platform.

Hmmm.

Thu, 07/16/2009 - 14:33 | 7923 Anonymous
Anonymous's picture

Ah. One does wonder what the potential variance within that five millisecond frame might mean to yield. But, we'll be talkin' gigaseconds soon enough, undoubtedly.

Anyhow, merci.

Thu, 07/16/2009 - 15:02 | 7944 Anonymous
Anonymous's picture

A thought along these lines . . .

An entity would have to be able to play within the backbone, do effective (undetected) network analysis, and impede targeted-source traffic. You'd have to bet that your aggressor traffic would go unnoticed by NYSE network analysis tools. Very risky, obviously criminal, and likely idiotic.

I suppose one could hire a person potentially good enough to be a member of a Sandia red team, but lacking moral fiber, to try such a thing.

(I clearly have to much free time today.)

Thu, 07/16/2009 - 22:05 | 8388 Zro
Zro's picture

I wonder how much GS and/or NYX would look to recover if foreigners DDoS'd the NYSE Euronext colocation centers

Thu, 07/16/2009 - 15:18 | 7961 Anonymous
Anonymous's picture

GS uses IBM already

Thu, 07/16/2009 - 13:25 | 7894 poydras
poydras's picture

Can anyone point to any evidence of this packet sniffing?  There is little effective difference between providing the ability to sniff and directly providing the data.  Quite a serious charge.

Thu, 07/16/2009 - 13:40 | 7902 deadhead
deadhead's picture

good question.  I think there have been suggestions that the SEC or the US Attorney should sniff around. 

 

Horrible pun intended.

 

 

Thu, 07/16/2009 - 15:10 | 7953 VegasBD
VegasBD's picture

My buddy is a Junipter specialist (the routers they use) and was part of the switchover recently. And when he gets drunk spills his guts on what he does that hes not supposed to say. He doesnt know much (doesnt follow markets or ZH), but what he does know combined with what i know they are probably using it for.... yea, its all true.

Thu, 07/16/2009 - 13:48 | 7907 Anonymous
Anonymous's picture

The powers-that-be do not inspect their own.

And what if they did? What then?

Does anyone, in their wildest and most idealistic notions of America, believe that they live in a country where people this powerful go to jail? Pay for their crimes? Please.

And don't mention Madoff, that tiny potato. He's nothing compared to the real game.

Thu, 07/16/2009 - 15:08 | 7950 Miles Kendig
Miles Kendig's picture

Yep... Britney & Paris no longer held sway so they were replaced with Bernie and whoever wants to say the media talks too much about them. 

Everything is OK now because the villan went to jail... Now give US your money or else the whole world will collapse!

Thu, 07/16/2009 - 17:32 | 8080 Bubby BankenStein
Bubby BankenStein's picture

Madoff was taken down as part of a smoke screen.

Thu, 07/16/2009 - 14:25 | 7916 Anonymous
Anonymous's picture

What does the line "NYSE's program to gift 5 ms latency packet sniffing to 85 Broad" mean? I know GS is @ 85 broad. What advantage do they have?

Thu, 07/16/2009 - 15:13 | 7956 VegasBD
VegasBD's picture

None. Their servers are housed by the NYSE in racks right next to them. For a fee of course. Everyones complicit.

Thu, 07/16/2009 - 22:09 | 8392 Zro
Zro's picture

Nothing wrong there. Google colocates servers at major backbones (Worldcom, Qwest, Cogent)  to provide content faster to their end-users. If latency is an issue, that's the way to do it. 

Thu, 07/16/2009 - 14:27 | 7918 ExpressoBold
ExpressoBold's picture

How far out is HFRX-EMN predicting? I didn't take time to look at the methodology description, just wondering if anyone knew offhand what the predictive indicator period was.

Thu, 07/16/2009 - 14:43 | 7931 lettuce
lettuce's picture

anybody else think that the fact that the government/sec/finra/sifma standing back from these ridiculously conflicted-interest programs (SLP and other rebate-based programs) which allow PT-dominance by the big banks is interesting? well, obviously i should be a bit clearer...

 

the government is spending a lot. they need a lot of money from us taxpayers in return, but taxes are unpopular. a populist (obama and team) movement does not want to be unpopular. duh.

 

carbon-emissions permits: costs passed-on to consumers. this is a tax.

public-transit fare increases: these agencies are run by local governments; costs passed-on to consumers. this is a tax.

governmental bystanding (allowance, encouragement!!!?) while GS, et. al., dominate the NYSE with PT -- what is it, 75% of all NYSE volume is from the banks' PT? -- and instead of providing liquidity as the programs claim to be focused on (come on, why do you need to trade 3 times as much just in order to provide enough liquidity for the rest of us?), end up screwing over retail, institutional and individual investors. but guess what... those profits by the prop desks are huge... and they are masking all of the downside losses from awful, awful loan books that the banks all still hold. ZH posted the MBS/CMBS writedown-figures from GS' release earlier this week. it was, albeit as not as bad as previously, disgraceful that there is no coverage of the losses. so, in essence, these prop-desk, PT-based profits are allowing the government-owned/sponsored banks to pay back that TARP money, its interest, as well as coupons on all of the government-owned preferreds.

 

to me, this sounds a lot like -- you got it -- an "investment tax" on those retail, institutional and individual investors that are out there getting battered-around by the PT battlebots.

 

i hate being a conspiracy theorist... i really do... it makes me feel unpatriotic, apathetic and downright negative. i don't read-up on chemical trails and fluoride in drinking water like some folks love to do (yea, i've heard the theories obviously). but with all of the press and focus on PT as of late, i cannot help but think about this to some degree.

 

what lesson are we to learn from all of this?? "don't get in their way" is the best thing i can come up with. and that downright stinks.

Thu, 07/16/2009 - 15:28 | 7965 3Gonads
3Gonads's picture

 At this point, short sellers are being bankrupted at 1 every 5ms

Thu, 07/16/2009 - 15:47 | 7978 Anonymous
Anonymous's picture

We are heading for another spectacular crash folks! THE REAL ECONOMY is getting worse and our politicians are doing the DEAD OPPOSITE of what needs to be done. I've seen so many in utter delusion in my lifetime.

Thu, 07/16/2009 - 16:03 | 7990 draino
draino's picture

We are heading for another spectacular crash folks! THE REAL ECONOMY is getting worse and our politicians are doing the DEAD OPPOSITE of what needs to be done. I've seen so
Agree good articles

Thu, 07/16/2009 - 16:12 | 8005 ShankyS
ShankyS's picture

HA! If you believe in patterns there is a nice head and shoulders there that will take it down to 980 soon! 

 

This is crap and everyone knows it. There is no regulation cause if there was it would all freaking crumble like the house of cards it is and the good ol us of a would be the laughing stock of the world (Close to it now). So as long as the big bonuses get paid and the lobbyists keep on funneling over the riches and the rich in the club get richer, who the hell is gonna stop it? Ron Paul is not superman, but he's the closest we got right now. 

Thu, 07/16/2009 - 16:49 | 8027 Anonymous
Anonymous's picture

Say, Tyler, your friend Ray from NYSE here. Couple of things:

-- Five milliseconds is the time it takes us to execute an order, as per the Dow Jones article you yourself cite. It does not give anyone an advance or exclusive look at the order information, if that's what you mean by "packet sniffing."

-- If you'd like to look into the practice of some exchanges and markets to hold up orders and "flash" the information from those orders to certain market participants -- something we do NOT do -- perhaps you should look into the practices by Direct Edge, Nasdaq, and Bats as reported by Traders magazine here: http://www.tradersmagazine.com/issues/20_296/-103978-1.html
or Reuters here: http://www.reuters.com/article/reutersComService_2_MOLT/idUSTRE55E4RR200...

Welcome a call from you if you'd like to discuss. Thanks. -- Ray

Thu, 07/16/2009 - 17:25 | 8071 Ray Pellecchia
Ray Pellecchia's picture

Apologies for "anonymous" post above; that was indeed me.  Messed up the login.  -- Ray

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