Goldman Defends Its Trading Practices, Claims It Does Not Front-Run The Market

Tyler Durden's picture

From Goldman Sachs Electronic Trading :

Our Practices in Handling Electronic Order Flow

To our Goldman Sachs Execution & Clearing, LP clients -

Given the pace of change in the equities market structure and the recent public dialogue about trading strategies, market venues and order handling, we thought it would be an ideal time to affirm our practices relating to electronic order handling and we highlight these in a letter to our customers.

We hope this description offers you some basic information about our order handling practices. We welcome your questions and are happy to provide more details. Furthermore, we invite you to visit us in our offices at 30 Hudson Street in Jersey City to engage in that dialogue. We welcome your feedback.

 

 

Zero Hedge will dissect these rebuttal shortly. In the meantime we bring readers' attention to this:

"The GSEC algorithms and smart router may receive Indications of Interest (“IOIs”) from other non-displayed pools."

Does Goldman think there is a problem with this practice? Who are these pools who Flash IOIs? Just what is so wrong with IOIs and why is Goldman steering away from it?

Also, where is the rebuttal that SIGMA X does not participate in "any so-called 'Flash' order type programs."

And here are some perspectives from an industry insider:

You do realize that Goldman has won and has achieved what they intended when they bought SLK, right? Total market making dominance. So now flash trading will become illegal and SLPs and co-locates will be forced to provide liquidity at all times (ala NASDAQ market makers). GS is perfectly positioned for this, they get to keep manipulating the markets, much like the specialist has always done since profits will eventually go against huge losses on 3 SDEV days, the only difference being that on 3 SDEV days, GS will go cry to uncle Sam and you and I will be paying for the losses much as we did now. In the meantime everyone else will bow out and GS and another few will legally be able to manipulate the market (which they can do without flash, through Sigma X for now). So heads they win, tails we loose. Well played Blankfein.