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Let's tax the HFT traders !
That's a solution the doofi gov't folks can get behind.
GoldmanSachs is a hedge fund, not a financial holding company.
The road to investor confidence:
The advice comes at the end
Listen up....here it is...
The BATS model has quickly proven that all
markets can be quickly de-fragemented and
This simplifies regulation....
ie Short selling....not to exceed float....first come first served by electronic tag....no upticks
ie Size limitations per account....
this gets rid of naked shorting when combined with SS tags....
ie EAsy to spot unusual activity around announcement times....
ie All price discovery should be all out in the open first come first served....
Individual traders have a "small size" and performance advantage if they know how to trade....not unlike any of the businesses that provide the majority of US jobs....
The exchange needs lots of small players ....not a few large players....The smartest....and the least smart....
Large players are not a good idea because of high concentrations and nowhere to go when everyone wants to exit at the same time....
Direct access technology has taken the place of the ancient market makers and specialists who bilked traders for decades...Their end has come....
Today....with electronic trading.....an exchange has just become time stamp software that can be located in any country....The cost of transferring, time stamping a different name should not exceed 20 cents per 100 units....
Why...because it is done today....
Also the de-fragmented exchange should have no account minimums or maximums....
Margin should be a simple 4:1 intraday or overnight....
The technology is already here today...and is already being used....
Wake up fool ! Where has BATS model shown any regulatory teeth or leadership ?
How has BATS de-fragmented the markets ?
Here's the Cliffnotes version: "We make a lot of money off HFT and black pools. Stop asking about HFT and black pools."
claw back all profits period, and let it bankrupt GS.
peterpeter, where are you ?
I cant wait to read your insighfull defense of the posted nonsense.
He's at a summit meeting with Kid Dynamite who believes that the most efficient market is a locked market. Or is he at an investment policy meeting with Cheeky Bastard, you know the long term uber bear, short term uber bull my bank account says it all guy.
I've just read the entire presentation. Personally, I have no issues with any one thing in this doc. My only issue is what was not covered in the doc - which is vertical integration and its potential for monopoly like consequences: as far as i know, some of the brokers which "specialize" in providing services to automated trades (incl. HFT shops) are Lime, Lek, Genesis, Lightspeed, GS etc. but, unlike the 1st 4 i mentioned, as far as i know, only GS also runs a dark pool, and also only GS trades for their own account. therefore potential issue is not if sponsored/naked/direct/dark is good/bad, but should any one entity be allowed to be in the business of all such things:
a) facilitating order flow/executions (e.g. broker service to market connectivity)
b) as well as order matching (e.g. internalization and/or via dark pool)
c) as well as trading for self profit of the same instruments in #a and #b business.
basically NASDAQ/NYSE/ECNs only match orders and are not a broker nor do they trade for their own account, where as GS does all 3 of these activities - however, i suspect NASDAQ/NYSE/ECNs are much more closely "monitored" than GS.
Tyler, perhaps such an argument would be more reflective of the true issues with the state of the markets' structures and potential areas of (feasible) improvements. I say this because i really fail to see how a retail trader entering 100-2000 share orders in their eTrade account gets "shafted" by SigmaX or some HFT shop. Whereas no one institutional entity should be entering "regular" manual orders for tens of thousands of shares (since they should have really had an account with a broker providing routing algos)? And as far as the HFT casino thing like what we saw in AIG a few weeks ago - wasn't it no different effect than the flotation driven rollercoasters of the late dotcom casino?
why would you stop co-location at the exchanges? all that will happen is the high frequency traders will set up shop across the street. they'll still get their 'unfair' advantage, you just can't stop them! effectively there will be a wealth transfer from the exchanges (who currently charge for co-location services) to the guy who owns the properties surrounding exchange buildings who will smartly increase his rent.
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