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Europe Begins Push To Ban HFT: Calls "Quote Stuffing" Market Abuse, Dark Pools "Tragic Error", And "Explicitly Rules Out" Flash Orders

Tyler Durden's picture





 

The push back against the HFT market-propping travesty is finally starting to gain steam...but for now only in Europe. After all, the Fed realizes all too well that it needs all the resources it can get in its bid (no pun intended) to keep stocks as artificially high as possible, of which the HFT upward biased feedback loop is a critical one (the PD POMO monetization circuit being a second one... and when both fail, there is always the Citadel dark pool direct purchasing channel). Reuters reports thet "Britain and France flagged on Thursday a looming crackdown on ultra-fast share trading that featured in May's brief "flash crash" freefall on Wall Street, alarming regulators and investors globally. French Economy Minister Christine Lagarde said a
form of computerized trading known as high-frequency trading (HFT) may
need banning in some cases
.
" Lagarde, who has recently shown a willingness to be seen as not part of the Bernanke mold, told reporters that her "natural tendency would be at least to
regulate, to oversee it very strictly and after a cost-benefit analysis
of these methods, maybe to forbid it.
" Elsewhere, a European Parliament November 16 report on MiFID "Calls for the practice of ‘layering’ or ‘quote stuffing’ to be explicitly defined as market abuse." This is something Zero Hedge has been demanding for about a year now, and obviously something that the corrupt regulators at the SEC, headed by the galactically incompetent Mary Schapiro continue to pretend does not exist. Lastly, in an attempt to make the life of the NYSE easier, whose primary source of revenue, now that Chinese IPOs have been uncovered to be a pathological, unauditable scam, has collapsed, the target has now shifted to dark pools: "
The proliferation of dark pools was a tragic error and I would like us to come back to it" according to Bank of France Governro Christian Noyer. The latest onslaught against dark pools is not at all surprising: after all the NYSE is pushing hard to preserve some semblance of relevance (and EPS) as it is now attempting to create "a global network of as many as 40 "liquidity hubs" in data centers around the world." All in all, this smells like the role of HFT right here in our own back yard is about to get seriously curbed. Add the fact that Prett Bharara is about to open at least one criminal case against a domestic HFT outfit, and the robotic permabid behind the market may soon be very, very scarce.

More on the upcoming HFT ban from Reuters. Then again, Europe may not exist long enough to be able to enforce anything soon as corporation soon take over Europe.

Bank of France Governor Christian Noyer told the same French parliamentary panel on Wednesday evening that HFT was a real problem.

"I would only see advantages if it was scrutinized as much as possible," Noyer said.

Industry officials said HFT takes place on regulated markets.

Of course, you can't have HFT bashing without the firm that made sure GM would not trade below $33 in the first two weeks coming to its defense:

Jim Farachi, director at Getco, a key player in HFT, said: "High frequency trading firms are market makers who utilize technology to provide liquidity to the market in a more efficient way than pit or phone trading."

The U.S. Securities and Exchange Commission, the FSA's equivalent on Wall Street, said this month it will take further steps to make markets more stable after the flash crash by zeroing in on lightning-fast Computerized trading that could "go crazy.

Elsewhere, in a totally separate dynamic, one in which exchanges continue to lose market share to dark pools, Europe made it clear that it would do all it can to side with the NYSE:

"The proliferation of dark pools was a tragic
error and I would like us to come back to it," France's Noyer said,
noting that it was up to market supervisors to address the matter.

This comes on the heels of news that the NYSE plans to offer a la carte global collocation services, in an attempt to make up for plunging profits by increasing volume.

NYSE Euronext said it was creating a global network of as many as 40 "liquidity hubs" in data centers around the world.

The "hubs" will be located in facilities operated by data center specialists such as Savvis, Equinix and Telx, according to Stanley Young, the chief executive of NYSE Euronext’s technical services arm, NYSE Technologies.

The exchange operator and supplier of exchange technology said it did not plan to build more large data centers like those it has just opened in Mahwah, N.J., and Basildon, England. Those two facilities, which it considers to be its “anchor hubs,’’ have cost NYSE Euronext more than a half-billion dollars to build.

The new "hubs" for providing market access, market data and risk management services to banks and trading firms will be radically smaller. Each is likely to require less than 1,000 square feet of space at the start, Young said.

By contrast, the Mahwah facility, built from scratch, spans 400,000 square feet. Each of its operating "pods" are 20,000 square feet.

Expansion of each “liquidity hub” will be determined by customer demand for services, which eventually is likely to include the co-location of trading firms’ and vendors’ servers in the space.

About 20 of these hubs will be set up in the next two years, Young said, and as many as 20 more by the end of 2013.

In the first quarter of next year, liquidity hubs will be set up to serve banks, brokerages and trading firms in Frankfurt, Lisbon, Paris and Milan, Young said. Sao Paolo, Brazil, and Toronto, Canada, are coming in the second quarter. Tokyo, Hong Kong and Singapore are all potential second quarter startups as well.

"Each of the hubs will have their own communities attached to them, depending on what the local need is. Those local communities will link together to be a global community,’’ Young said.

On the other hand, if retail withdrawals persist at the current run rate, there will be nobody left trading except the big banks, which already have their own fat pipes direct to the exchanges (not to mention their own dark pool ATS infrastructure, see - REDI) thus making any attempt by the NYSE to generate incremental profits moot.

Lastly, and most importantly, a report on the regulation of trading in financial instruments issued by the European Parliament had some very scathing remarks about all that is broken in today's market structure. The key recommendations from the report (link):

  • Insists that post-’flash crash’, all trading platforms must be able to demonstrate to national supervisors that their technology and surveillance systems are able to withstand the kind of barrage of orders experienced on 6 May so as to ensure that they could successfully deal with the activity associated with HFT and algorithmic trading in extreme circumstances and show that they are able to re-create their order books by end of day so that causes of unusual market activity can be pinpointed and any suspected market abuse identified;
  • Calls on ESMA to conduct an examination of the costs and benefits of algorithmic and high-frequency trading (HFT) on markets and its impact upon other market users, particularly institutional investors, to determine whether the significant market flow generated automatically is providing real liquidity to the market and what effect this has on overall price discovery, as well as the potential for abuses by manipulation of the market leading to an uneven playing field between market participants, and its impact on overall market stability;
  • Calls for the practice of ‘layering’ or ‘quote stuffing’ to be explicitly defined as market abuse;
  • Calls for an investigation into whether to regulate firms that pursue HFT strategies in order to ensure that they have robust systems and controls with ongoing regulatory reviews of the algorithms they use, the capacity for intra-day monitoring and interrogation about real-time outstanding positions and leverage, and the ability to demonstrate that they have strong management procedures in place for abnormal events;
  • Calls for an examination of HFT’s challenges in terms of market monitoring; recognises the need for regulators to have the appropriate means to detect and monitor potential abusive behaviour; with this in mind, calls for the reporting to the competent authorities of all orders received by regulated markets and MTFs, as well as of trades done on these platforms;
  • Calls for all trading venues allowing co-location of servers, whether directly or through third-party data providers, to ensure that equal access for all co-located clients is maintained and where possible under the same infrastructure latency arrangements in order to comply with non-discriminatory practice outlined in MiFID
  • Takes the view that, in order to comply with the principle that all investors should be treated equally, the practice of flash orders should be explicitly ruled out;
  • Asks for ESMA supervision and definition by implementing acts of robust volatility interrupts and circuit breakers which operate simultaneously across all EU trading venues in order to prevent a US-style ‘flash crash’ event;

And HFT is not the only thing that is being targetted:

  • Calls for proprietary trading activities conducted via algorithmic trading strategies by unregulated entities to be transacted solely through a regulated financial counterparty;
  • Calls for the extension of the scope of the MiFID transparency regime to all ‘equity-like’ instruments including depository receipts (DRs), exchange traded funds (ETFs), exchange traded commodities (EDCs) and certificates;

Our friends at Themis Trading will be happy to know that Europe is now openly blasting fraud-facilitating market fragmentation:

Market fragmentation has led to poor post-trade transparency as a result of spreading trading over various venues and in particular on the quality of the post-trade data. A more effective regulatory framework for consolidated post-trade information is required which encompasses new technical codes in the settlement process to better reflect an environment where traders can execute on multiple venues. Regulators need to ensure that they can, at any time, recreate the order book in order to understand the market dynamics and participants involvement. Regulatory intervention also seems necessary to remove the outstanding barriers to the consolidation of post-trade data in order to establish a privately run European Consolidated Tape system.

And a broader narrative on how HFT straegies are nothing but parasitic:

Any well functioning market requires firms willing to provide liquidity and make public prices. Traditionally, specialists and market makers have carried out this function by quoting 2 way prices and generating revenue from the spread. As the market has evolved, the way in which the provision of liquidity is implemented has changed. In particular, with the advent of technology, algorithmic trading firms are now providing liquidity in the markets by posting 2 sided orders onto electronic order books and making a public price. Market makers typically do not hold investments for any length of time and therefore HFT strategies have evolved to capitalise on this function. It would seem appropriate that further analysis be done on the obligations and responsibilities that may be required of these informal market makers. If they are benefiting from a market maker pricing structure they should be obligated to provide a market price when required.

HFT is not a trading strategy in itself but can be applied to a variety of trading strategies which all have high portfolio turnover in common; many can process up to 33,000 trades per second, with sub microsecond roundtrip times for trading. They all have a requirement for speed and are therefore latency sensitive, requiring high capacity market data feeds and trade matching and quoting engines. They typically fall into two categories: electronic market making and statistical arbitrage. It is estimated that the volume of trading conducted by HFT traders is in excess of 35% and rising. This is compared to 70% of volume transacted in the US markets where it is less expensive to operate a HFT strategy. It is expected that the costs in the EU of clearing and settlement are a barrier to further expansion and so any reduction in costs is likely to have an additional effect on the market dynamics.

Little data is available for the impact these HFT strategies are having on the market and in particular as to whether the aggregate impact of technology could impact the resilience of the market itself. It would seem that HFT has increased liquidity and has tightened the spreads for investors; however, further investigation needs to be carried out to ascertain whether the quality of this liquidity is useful as often there is little volume at the touch and questions arise over the validity of the depth shown on order books. Analysis also needs to be carried out to determine whether price formation has also been impacted negatively by the increase in HFT.

An observation has been made that many of these HFT players are operating as proprietary trading houses and are as such unregulated entities and therefore do not need to comply with MiFID rules. Given that there is a political mood for all significant market participants to be appropriately regulated, we suggest that this should apply to these firms, with the expansion of MiFID reporting rules to cover these entities being required as a matter of urgency. In particular there needs to be oversight of the systems and risk management of these firms as demonstrated by the US ‘Flash Crash’ on May 6th. Stress testing of platforms should be carried out to ensure that they are capable of dealing with a ‘runaway algorithm’. Data capture of all market participants’ activity needs to be prioritised to enable regulators to reconstruct order books, when necessary, to monitor the functioning of safe and efficient markets. Given the volume of transactions, it would seem that they may pose a systemic risk to the system which needs to be investigated pan-EU.

...

In conclusion, it seems that a significant consequence of the competition brought about by the implementation of MiFID has been market fragmentation which has in itself encouraged the explosive growth of HFT strategies. Regulation needs to recognise that these technological advances are in need of suitable provisions in the legislation in order that they do not fall through regulatory gaps and inadvertently cause systemic risk to the overall functioning of the markets.

All this is great. Then again, the SEC idiots banned flash trading in the summer of 2009... And it is still occurring every single day. Nothing except the termination of Schapiro as head of the most criminally corrupt and incompetent regulator in the world at this point can allow a real regulatory reappraisal of the broken markets to take place.

h/t Mark's market analysis and James

 


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Thu, 11/25/2010 - 15:13 | Link to Comment Geronimo66
Geronimo66's picture

Odd! Dutch regulator AFM did not found HFT any problem earlier this week.

Thu, 11/25/2010 - 16:06 | Link to Comment MeTarzanUjane
MeTarzanUjane's picture

Exactly. Hyperbole.

When they push guess what they will get in return?

Connection: close

Thu, 11/25/2010 - 15:19 | Link to Comment snowball777
snowball777's picture

What is Mary Schapiro but Lloyd in drag?

Thu, 11/25/2010 - 17:36 | Link to Comment Problem Is
Problem Is's picture

That's an ugly picture...

<CUE> WillB7...

Thu, 11/25/2010 - 18:15 | Link to Comment snowball777
snowball777's picture

Here's some legwork for ya, WB...

http://bit.ly/hjOJl9

http://bit.ly/fI1EgH

 

Thu, 11/25/2010 - 20:59 | Link to Comment Careless Whisper
Careless Whisper's picture

i still don't understand why retail traders can only enter an order with two decimal places, but others get to use up to four decimals, thus jumping in front of the retail orders.

WTF

Fri, 11/26/2010 - 02:23 | Link to Comment williambanzai7
williambanzai7's picture

Fri, 11/26/2010 - 07:03 | Link to Comment velobabe
velobabe's picture

william, i want to talk to you today†

your UNamerican.

Thu, 11/25/2010 - 15:20 | Link to Comment williambanzai7
williambanzai7's picture

Tough talk. Timmah, get Ben on the horn to explain how money printing works.

Thu, 11/25/2010 - 15:24 | Link to Comment Fat Ass
Fat Ass's picture

Quite simply --- FUCKING BAN all computer trading now. Just introduce a simple rule that trades must stand for say 120 seconds ...............

and that's the end of the whole insanity. At a stroke. Simple.

We live in a bizarre "no action possible" era. All we need is simple ACTION, someone, somewhere, at some level, should just ban computerised trading.

It's silly and does nothing to help the world - so just get rid of it altogether.

If it was completely banned .. a few hundred people would lose their (completely silly) income.

Who cares about those few hundred people? Nobody ... just COMPLETELY BAN FUCKING COMPUTERISED TRADING instantly, this afternoon.

But we live in a strange time when that SIMPLY WON'T HAPPEN.

We truly live in an "age of inaction." It's more or less impossible to do ANYTHING. Even something as staggeringly obvious as "just ban computer trading" ... it will never happen.

Why?

It's bizarre. We live in the "age of inaction."

We should simply completely ban computerised trading this afternoon. It's plain silly and should just be iliminated. But .... that won't happen. Why? We live in a bizarre age of inaction where "nothing can be done."

Thu, 11/25/2010 - 15:44 | Link to Comment Threeggg
Threeggg's picture

11/25/10 DUBAI, United Arab Emirates (AP) -- Abu Dhabi Commercial Bank said Thursday it is suing Credit Suisse and credit rating agency Standard & Poor's, alleging it was misled over a 2007 investment that went sour.

The case is the second filed by the Abu Dhabi government-controlled bank in New York involving complex financial instruments known as structured investment vehicles that fell prey to the credit squeeze brought on by the subprime mortgage crisis in the U.S.

ADCB alleges that Credit Suisse failed to disclose conflicts of interest and provided misleading information when packaging and selling the investment vehicle, which went by the name Farmington. The bank says it was pressured to invest in the deal in 2007 to protect its stake in an earlier, similar investment known as Stanfield Victoria that was coming under pressure at the time.

As part of the agreement, ADCB claims it was required to enter into another transaction known as a credit default swap designed to protect Credit Suisse's exposure to the Farmington deal, which it believed "carried minimal risk."

Structured investment vehicles were set up to borrow money by issuing short-term securities at a low interest rate. They would lend that money by purchasing long-term securities at higher interest. Investors were able to profit from the difference, as were issuing banks that charged fees to structure them.

ADCB is suing S&P because it alleges the rating house made inaccurate assessments tied to the Farmington investment by assigning ratings to underlying assets that were "investment-grade," suggesting they were relatively safe.

Ala'a Eraiqat, ADCB's chief executive said the lawsuit aims to protect the bank from potential losses, but he doesn't expect it to have a major effect on the company's earnings.

"For the benefit of all our key stakeholders, it is appropriate to take action against parties who we believe misled ADCB," he said in a statement outlining the lawsuit. "On close examination, the investment was sold to the bank in an unacceptable manner."

Representatives for Credit Suisse and S&P declined to comment.

ADCB is pursuing a separate suit involving structured investment vehicles against Morgan Stanley, S&P, and another rating agency, Moody's Investors Service.

That case, a class-action suit filed in 2008, seeks damages resulting from the collapse of an SIV known as Cheyne that was backed by U.S. mortgages and other securities.

http://finance.yahoo.com/news/Abu-Dhabi-bank-sues-Credit-apf-1922649766.html?x=0&sec=topStories&pos=7&asset=&ccode=

How many law suits are we going to have in 2011 ?  Thousands !

This is like when your in a drunken stuper going to bed with a hot girl you picked up at the Pub, and then as you wake up in the morning slowly gaining your vision she starts looking mighty Shreckish'.

Gettin Ugly !

Thu, 11/25/2010 - 18:03 | Link to Comment velobabe
velobabe's picture

Shrubbery, bitchez†

Thu, 11/25/2010 - 15:55 | Link to Comment qussl3
qussl3's picture

What better way to force a bid into the bond markets by removing the phantom bid in the equities.

Will be fucking funny when the liquidity chooses to move into commodities and PMs.

Thu, 11/25/2010 - 16:25 | Link to Comment Bearster
Bearster's picture

The fact that Europe--not exactly known for their belief in free markets--is proposing to ban something is does necessarily help prove that this something is bad.

And, btw, if HFT's are to close their positions after only a brief holding period, they must sell as often as they buy.  The claim that they exert an "upward bias" on prices is dubious.

Far better to deregulate exchanges, so that new companies who are able to grasp the issues of queueing including segregated queues, latency, and high-performance computing can take market share from the dinosaurs at NYSE who (according to the picture I get at ZH) don't seem to be able to keep their system robust against a few thousand quotes per second.

But that's what regulation achieves: incumbent protection.  So you need more regulation and more and more, each new wave made possible, justified, and demanded by the results of the previous.

Thu, 11/25/2010 - 16:32 | Link to Comment Sudden Debt
Sudden Debt's picture

The first question:

after how many quotes is it called quote stuffing?

Second question:

Is there a limit on accounts people/firms can use on quoting on 1 stock?

 

Whatever the answers, it's going to be peanuts to find a backdoor.

You just can't stop it.

UNLESS:

1. You stop digital trading

2. You put in a surtain time a buyer will have to hang on to a stock they buy.

Results:

C R A S H

Thu, 11/25/2010 - 17:06 | Link to Comment GoinFawr
GoinFawr's picture

"The first question:

after how many quotes is it called quote stuffing?"

Ans. One (1), if there was never any intent for the order to be filled.

 

"Second question:

Is there a limit on accounts people/firms can use on quoting on 1 stock?"

Ans. Congratz, you found loophole number 1,298.

As for your 'crash' scenario: yah, it's likely, if everyone suddenly had to hold their shares for 2 minutes, but only while the TBTF's still had some spleen left to vent on us. After the big boys finished firing their bullets into the world's economic head it might well cease to exist as it has existed for the last hundred years or so, indeud. Then again, that running sore of a beast needed taking down anyway, right? When resurrected we could have a real golden winner in its place; who knows?

"Gonna make an omelete you gotta break a few eggs" and all that cal...

Regards

 

Thu, 11/25/2010 - 17:09 | Link to Comment Sudden Debt
Sudden Debt's picture

Ans. One (1), if there was never any intent for the order to be filled.

Almost half of the time I put in a buy or sell order, in the middle I change my mind.

Also selling when a stock crashes forces you to sometimes enter 4 to 5 orders.

That would send me to jail?

Thu, 11/25/2010 - 17:34 | Link to Comment GoinFawr
GoinFawr's picture

And you`ve hit the nail on the head: "intent" it can be very tough to prove... but in your specific cases:

"Almost half of the time I put in a buy or sell order, in the middle I change my mind."

But when you put those orders in, you intended them to be filled, not manipulate the price in one direction or the other so you could create an arbitrage situation for another position you hold.

"Also selling when a stock crashes forces you to sometimes enter 4 to 5 orders...That would send me to jail?"

I don't think so, as you had a desire for every one those transactions to occur, rather than entering them as a means to pull the price back up to where you could profitably close a position already held.

Intent

Oh, and ability too; I don't want to assume anything here, but it is unlikely you alone have the power to place and pull bid/ask sizes at a rate that would move around the price of anything above a low volume penny stock. In that case however...

All IMHO, natch.

Regards

Thu, 11/25/2010 - 18:24 | Link to Comment Sudden Debt
Sudden Debt's picture

Thx for the responce. You sound a bit like a lawyer :)

Thu, 11/25/2010 - 17:10 | Link to Comment Sudden Debt
Sudden Debt's picture

And I'll only say it once!

Thu, 11/25/2010 - 16:28 | Link to Comment Sudden Debt
Sudden Debt's picture

They day they actually figure it out how it works (somewhere between 2052 and 2060), and be able to actually make a law and push in into European law, I'm sure they'll ban it.

 

Thu, 11/25/2010 - 16:36 | Link to Comment GFORCE
GFORCE's picture

Maybe the checks haven't made it to europe yet?

Thu, 11/25/2010 - 17:09 | Link to Comment GoinFawr
GoinFawr's picture

Looks like the usual "show and tell" session to me.

We get shown that everyone is well aware of the egregious dangers of certain trading practices, but we are told absolutely nothing about what is really going to end up being done.

IMHO on how this will play out on the global marketplace:

Any legislation or regulations enforced will be acutely focussed on limiting small businesses' use of the technology, while the largest firms will get a long list of 'exemptions' for usage, and simply continue to consolidate their skimming power by forcing out smaller algo-rythmic competitors who will have been subsequently crushed anyway by additional onerous beancounting requirements.

"Do as we say, not as we do, peasants."

Anyone else getting a bit tired of this meme?

Regards

Thu, 11/25/2010 - 17:07 | Link to Comment erik
erik's picture

The question is where is the buying power coming from to offset mutual fund outflows and insider selling?

If it is ETF inflows then we need data to confirm that.  According to State Street, ETFs held $772B in assets at the end of June 2010.  Total ETF assets dropped 0.4% in 2010 as of June 30th.  Gold ETFs and Bond ETFs saw inflows that totaled ~$30B, which means that stock ETFs must have seen outflows equal to that in order to reach the -0.4% drop year to date in total ETFs as of June 30th.

The problem with stock ETF flows is that there are both bear and bull stock ETFs so just looking at the inflows and outflows doesn't necessarily tell us about direction.  Though SPY is the largest stock ETF which suggests that outflows means stock selling.

So up until the end of June 2010, we saw stock mutual fund outflows of $22B, ETF outflows of ~$30B, and insider selling too.  The stock market was down 8.9% year-to-date as of June 30th 2010.

Since then we have seen ~$50B in stock mutual fund outflows and huge insider selling.  There is no data on ETFs since June 2010 that I can find, but we can infer that there have been outflows from stock ETFs based on the other two data points.  Contrary to the data though, the stock market is up 16.3% since June 30th 2010.

This begs the question, where is the money coming from to offset the substantial selling?

Thu, 11/25/2010 - 17:16 | Link to Comment erik
erik's picture

"Net cash flow into U.S.-listed ETFs reached an estimated $32.9 billion in the recently ended third quarter, according to a report sent to clients Monday by Morgan Stanley Smith Barney.  Not surprisingly, emerging markets and bond ETFs collected the lion’s share, a combined $24.6 billion in assets during Q3 2010.  Inflows in QQQQ with $2.4 billion and the SPY at $1.6 billion."

-----------------------

So we have ~$50B in stock mutual fund outflows offset by a mere ~$4B in stock ETF inflows, and massive insider selling.

Where is the money coming from to move the markets higher?

Thu, 11/25/2010 - 18:50 | Link to Comment FunkyMonkeyBoy
FunkyMonkeyBoy's picture

No accountability, no audits, no answers. That's all you need to know. The market is at where the powers that be want it to be by the second, minute, hour and day... no need to for logic to apply in this systematic corrupt nonsense.

Thu, 11/25/2010 - 20:18 | Link to Comment merehuman
merehuman's picture

Erik, turn yourself in for mental stabilization and reconditioning.

Critical thought is not allowed

Thu, 11/25/2010 - 17:32 | Link to Comment Dr. Acula
Dr. Acula's picture

Is this a case of EU government interfering with the operation of stock exchanges?

Since they know so much about markets, why don't they go further and just fix the prices of the stocks at the correct values?

 

Thu, 11/25/2010 - 17:37 | Link to Comment Hondo
Hondo's picture

Ban all fascist activity.

Thu, 11/25/2010 - 17:37 | Link to Comment RobotTrader
RobotTrader's picture

Stopping computer-based financial gambling is a complete and total waste of time.

My prediction is that within 18 months, stocks worldwide will be traded 24/7 round the clock.

Don't believe me?

Just check out sports betting, which is at least 10x bigger than financial speculation among the public.

There are virtually an unlimited amount of bets that can be placed, 24/7, on any sport, of any "derivative" you can think of, from thousands of offshore casinos accessed from PDA's.

And exactly what do you think is going to happen once the sheep are herded back to the NYSE casino?

There will be 24/7 trading available on smartphones, anywhere, anytime.

Of course, the only way for the sheep to be enticed back in to the NYSE is for the Dow to break out over 14,000 again, which might take another 18 months.

 

Fri, 11/26/2010 - 09:23 | Link to Comment Sudden Debt
Sudden Debt's picture

with the premarket en pré- prémarket and the pré- pré- pré market trading thats going on these days, it seems like a happy few already get that privilege of trading 24/7.

I still don't get it when the after- after- aftermarket closes and the pré- pré prémarket starts. It's like every times it happened, I must have blinked my eyes...

 

Why not erase all regulations and let the stock market run like the OTC markets where the companies can have full control of all trades.

Add a few more shares without communication of how many they add, cancel sell order and put their shares first in line.

Cancel buy orders when things improve and start a buy back themselves...

UTOPIA!

Thu, 11/25/2010 - 17:54 | Link to Comment tip e. canoe
tip e. canoe's picture

Noyer stirs dark pools.
What's the frequency, Madame?
...cockroaches scatter...

Thu, 11/25/2010 - 20:51 | Link to Comment FreakuentFlyer
FreakuentFlyer's picture

stopping the use of computers in trading, is about as likely as going back to handwriting in publishing.

 

any "quote duration" setup can still allow for computer edge, by using computers to more quickly make order changes a nanosecond or picosecond upon the time limit expiration.

 

the only remedy that might work is to use brokerage data to identify HFT trades (all brokers know the time delta between position opening and closing - exchanges do not). then you can report on such trades, and levy a profit tax to be distributed to non HFT market participants, in a dividend like distribution.

 

this type of an approach would still give the traders (&HFT) an incentive to provide liquidity as well as reduce the trading costs to investors who pay for the privilege of immediacy.

Thu, 11/25/2010 - 23:13 | Link to Comment max2205
max2205's picture

I usually go ugly early. At the pub and at the open

Fri, 11/26/2010 - 09:52 | Link to Comment New_Meat
New_Meat's picture

ensure success

Fri, 11/26/2010 - 10:32 | Link to Comment trx
trx's picture

Ban HFT? Ban on computerized trading? Sure...why not ban the whole internet!

(Cell phones, too!)

And while we're at it; make computer science illegal, put some tough restrictions on evolution and erase all Darwinistic material from students text books...

I'll side with RobotTrader on this one.

Wanna bet aginst capitalism? Go ahead!

This is just another example of naive regulatory ignorance.

By the way; Norway raised its cyber threat level to 3 (the highest) this week after severe attacks against the Government building. Somehow the ministers and their staff had "forgot" to update their Adobe PDF readers.....

Hackers Attack Norwegian Government – Again

 

Now, I'll get back to my rare-earth-metal-ion-doped inorganic crystal based quantum computer.

Cheers!

Fri, 11/26/2010 - 16:43 | Link to Comment GoinFawr
GoinFawr's picture

"Ban HFT? Ban on computerized trading? Sure...why not ban the whole internet!

(Cell phones, too!)"

Not the most causal sequence of events you've outlined there trx, now is it?

 

Sat, 11/27/2010 - 08:29 | Link to Comment trx
trx's picture

Naa..perhaps not ;-)

Guess it's mostly an expression of frustration over the regulatory ignorance in general.

I'm well aware of the problems with HFT, but in my mind the financial authrorities are taking the wrong approach. Why don't start by forbid the exchanges to hand out information to selected customers before is distrubuted to the rest of the market? That's just plain unfair...

Anyway - in a couple of years even Grandma will be a high frequency trader...

(On average - computer speed doubles every 18 months)

So, let's keep it real, okay?

Fri, 11/26/2010 - 16:16 | Link to Comment Ted K
Ted K's picture

HFT and quote stuffing isn't "Market abuse"!!!! It's rich bastards like Goldman Sachs partners giving the great unwashed the beneficent gift of "price discovery".  Damn don't ruin this for me after all the work WSJ's editorial page, FOX news, CNBC, and DrudgeReport have done to brainwash us!!!!  You bastaaawds!!!

Fri, 11/26/2010 - 18:34 | Link to Comment Atomizer
Atomizer's picture

How Television Works

http://www.youtube.com/watch?v=uBm9ZyIg3I0

Hope everyone had a grand Thanksgiving

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