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Guest Post: Is The NYSE Manipulating Trades?
Submitted by Wall St. Cheat Sheet, Authored by Gilbert “Gman” Mendez, the Head Trader at SMB Capital.
All my pre-hybrid sketchy experiences with NYSE have left me with a
sour taste. If you were to sit at my desk, you would hear how I’d pay
higher ECN fees to EDGX or get worse fills rather than to give any
business to NYSE. I refuse to send any orders through them. And it is
not like my 50Mln shares a year would really make a huge difference.
Call me loco but I just don’t give them my business.
Although, while reviewing my numbers from last year I realized that
being overly stubborn about this cost me close to 40-50k — and that’s
just a low ball. Talk about a self-imposed rip. In the words of Chaz
played by Will Ferrell in Wedding Crashers: “What an Idiot!!”
So, coming into this year I made changes to my execution hotkeys. I
added NYSE sweep keys and I moved them up the ECN toggle list for
bidding and offering stock. And while my ECN fees have come down
slightly, I am disturbed by the shenanigans of how my orders are
treated. Let me give you a couple of examples.
First, I must admit I have never been a fan of stop orders. But now
that I have way too many positions riding at the same time, it is the
only way I can manage my risk. Nonetheless, I only use orders triggered
by prints locally on my computer to route through ARCA. I have always
felt that stop orders that reside at the NYSE exchange can be
manipulated. The exchange can argue all they want about the floor
specialist not being able to see the orders, but I find it to be too
big of a coincidence that stops too often go off at some mysterious
prints. Check out what happened to the trader who sits next to me who
put in a NYSE buy-stop at 45.24 for 100 shares to cover his short.
Someone please explain how it is possible for a buy-stop that is
hosted at the exchange to go off when 45.24 prints but does so only by
printing the 100 shares that were in the buy stop. Coincidental? Maybe.
Sketchy? Very!
But wait let me show you my personal favorite these days. Getting my
orders front run by NYSE. Let me illustrate what this looks like on the
tape with the following short clip:
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Excellent.Thank you Tyler.
These people are criminals, it is just plain as day.
Well you're just going to have to trust and respect them because they are once again going for the big hail mary pass before canning and being good boys and girls for long enough to gain enough respect and trust to abuse it again. Lets keep doing this forever. What else we got to do beside actually ENJOY LIFE WITHOUT A BUNCH OF STUPID HASSLE FROM STUPID PEOPLE WHO KNOW BETTER BUT DON'T CARE.
Just beause they can't ascend past your ass it just make you a bigger challenge and a longer stupid nihilistic endeavor.
The whole system has gone back to the Wild West time. Not even that. Supposedly back then there were some values... twisted... but values.
Very illustrative. Thanks.
Illustrative of the fact that the submitter is just straight up wrong, as evidenced by the video.
The facts:
1. NYSE is bidding 100 shares at $50.98. This is what the little "1" means next to the quote on the screen.
2. Our hero decides to place a 300 share sell at $50.98, routed to NYSE. Keep in mind, NYSE has only 100 shares showing, so there's NO reason to expect you'd get filled for more than 100 shares.
3. No surprise, he gets filled on 100 shares.
4. Some computer sees this fill and decides "someone's selling" and immediately takes out all the other exchanges bids.
Conclusion:
If NYSE shows 100 shares, and you try to hit it with 300, you might not get filled for more than 100. But you GOT the 100 shares, and to top it off someone came in AFTER you with bigger size and moved the market IN YOUR FAVOR. It's exactly as if you front-ran the later trades, although for that you'd have to know something.
Moral:
Whoever sold you 100 shares on NYSE LOST MONEY to you as a result of that trade and you complain?? You have the intellectual power of a fucking retarded monkey. Please continue to trade.
dear anonymous,
"whoever sold you 100 shares on NYSE LOST MONEY"?
Huh, no-one sold him 100 shares. someone BOUGHT 100 shares from him at 98 cents.
trading 101 when u offer stock for sale and get executed then someone is BUYING from u.
and if u actually watch the tape carefully he didn't get executed against any bids at 98 cents, but in fact someone paid the 98 offer.
good stuff.
That was a great video and he did a good job explaining what was going on, for us non-trader types. Really appreciate that.
Ya it was very good point in the many points of this drama. I just am itching for when summer hits and the haiti relief fraud starts coming out. It's going to get juicy then.
On many occasions when you look at a graph of a certain stock,you see a huge oscilation to the down (or up side) in a certain tick. And that would be o.k. if there is a huge volume but it would be without the huge volume. In the process they hit all the stop losses or the limit orders. Now whether they see the stop orders or not,that kind of huge spread should be band. I can understand it if there is a sudden huge volume differential,but without it,the only thing one can see is a delibrate attempt to hit the stop orders
Couldn't you do something to mess with these High-Frequency trade robots? Like putting in a buy limit for 100 shares and right below it putting in a sell stop for 1000 shares and then canceling it when the 100 shares above filled?
Mary Shapiro says suck it up
In 2007 I had to stop using sell stops to help manage risks for my clients because of just this type of tape. I had used them for 10 years before then, but the markets have long ago ceased to have even the appearance of orderliness. I was so surprised that evidence I had sent to the SEC was never investigated, nor did I even get the courtesy of a response - imagine that! I suppose the notion that the system wasn't rigged was always an illusion, but it used to be a pleasant one.
Don't feel bad the guy that reported Madoff twice sent them all the proof and basically laid the whole case out for them and look what happened. The SEC knows but the people that work for them will be working for major financial institutions when they leave so there is always a conflict of interest.
So wait what happens? he tries to sell 400 share at 50.980? and then the computer puts his sale number up t 5.985?
Send the clip in an "open" e-mail to the SEC!!!! Let the world know....or someone to explain
What??? There is manipulation in the United States of America's stock market?!?!? No way, impossible!!! The law enforcers of America plus the upholding and upstanding people at the SEC, FDIC, NYFED, NASDAQ, CFTC, COMEX, PPT, OU812, FedRes, DOW, 867-5309 (Jenny)... would be sending people to jail immediately for manipulation.
Oh.... wait... i mean the above SUPPORTS manipulation and no one ever goes to jail (except stupid people who live like Kings for decades to then admit to fraud and spend maybe three years in jail like Madoff... who had to admit it because even with all the evidence in regulator's hands for years the USA never acted on a clearcut case of fraud).
Seriously guys, it is time to do a bank run. If you really want to stop this nonsense, remove all your money from the banks (except what is necessary to keep the lights on) and remove all Wall Street investments. Cash out now!
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that ye were our countrymen."
-- Samuel Adams, speech at the Philadelphia State House, August 1, 1776.
I've already pulled out. I'm not a big shot investor. Just a working class guy. But I wont deal with a wall street bank. The decision to pull my cash out of the bank was made a lot easier by the fact that I could keep it in the bank at .06% interest, which didn't win me over. Keep talking about boycotting these hoods. We're all getting ripped off like this poor guy in the video. It's really sad.
Crime scene
my lord... this guy's been raped just under my eyes and i just can do nothing
the stop was for nyse at ask so nothing evil had to happen
anyone who thinks this is how things work is completely uninformed and passing along a false premise
That's terrifying. I've seen the same thing, though -- I put in stop and limit orders and they get hit several points from where I placed the order.
High rolling it with my Scottrade account, I wouldn't have clue. But hey, chill, because it's the new zeitgeist. Everybody manipulates everybody. Consider this bit of spam I received the other day.
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Because of this, the Feds need to find a way to get folks to
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investors to buy Treasuries as a safe-haven?
Consider that yesterday the US issued $10 billion in one month
Treasury notes. The auction was so overbid that the notes ended
up yielding 0.0%.
Put another way, so many people piled into US debt yesterday that
Treasuries rose high enough that they were no longer yielding ANYTHING.
Investors were getting nothing for the right to have their money locked up
with Uncle Sam.
Where did all this demand come from?
S&P 500 PLUNGES
And we've got another $2 trillion in US debt to go.
That demand will have to come from somewhere...
and when it comes time to choose, which do you think the Feds will sacrifice? Your 401(K) in stocks or their ability to keep spending money around the clock?
Somehow I don't think it will be their ability to spend.
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I figure when the meme starts showing up this particular context in sales pitches in my email, it' s pretty well saturated the whole culture. I was going to for that kick-the-can portfolio, based on "continued money spending/ corporate favoritism shown by the World's Government (these are the companies that continually receive unfair deals and kick-backs)." But then I realized I already knew all the stocks that would be in it. They don't bother to hide it anymore.
Hi John
My email was not spam. If you received it it's because you did a "double opt-in" meaning you not only signed up for my e-letter but confirmed your email address. It is impossible for you to receive a message from me otherwise.
Hence my email is not spam. Claiming it is in a public forum is fairly serious since it damages my reputation and business. I would prefer if you removed that claim.
Best
Graham Summers
Is this better or worse than the non electronic floor based specialist system? and would your fill have been better or worse if you tried to hit the bid on direct edge (50.95)?
You see it. You know its happening. So, why are you still going there ? If everyone stopped using the exchange, then it would die soon enough.
You perpetrate its existence by continuing to trade within it.
Fraud and criminality are clearly visible throughout large sections of the global financial systems. Only by vocal opposition and "shunning" can this problem be fixed.
Sure, starve the corrupt exchange. Don't deal with them, and don't be surprised when they take your money anyway via taxpayer-funded bailout.
Hmm... what you just said sounds just like the scumbags who say sheeple/taxpayers MUST bail out bankster or said banksters will kill the economy.
i have two words for that.
One begins with an F
The other begins with a Y
Thomas Jefferson warned of the damage that would be caused if the people assigned control of the money supply to the banking sector, "I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. This issuing power should be taken from the banks and restored to the people to whom it properly belongs. If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered. I hope we shall crush in its birth the aristocracy of the moneyed corporations which already dare to challenge our Government to a trial of strength and bid defiance to the laws of our country"
--- Thomas Jefferson, 1791
please. it is 40 bucks. get over it.
poor baby....where are you, I'll send you some crying towels...
Could it be flash trading i.e. they are not aware of your stop but every "very often" for a nano sec, they remore their orders "just to see" and/or buy what's there to resell it after?
I've read a lot about it, they try to host their servers as close as possible to the stocks ones to get the edge over ordinary traders.
In my opinion, there should be a "random" delay not noticeable by humains added to any order to avoid all this
Unf***g believable.
They even rip the bigger boys...
But hey I'm from Europe so very naive.
Unf***g believable.
They even rip the bigger boys...
But hey I'm from Europe so very naive.
I hope that's a rhetorical question. This is why I have completely stopped any and all trading in stocks. I don't own stocks. I don't trade stocks. Fuck stocks. Period. Starve the beast folks; don't trade in the casino known as the NYSE.
Oh yea they front run your 300 shares. I mean I guess they know an order that big has to move the market so they sell infront of you. Man if I could just figure out what all of the 300 share orders were going to do, and do it infront of them, I would always be right with no risk. I mean selling 1500 knowing that you will sell 200 (after your first 100, that was the only quantity on NYSE) is a free money, I mean how can it go wrong?
PS I will say the buystop thing is fishy, but you always have that risk and should know it before you put one in. Some places buy if they bid is that price or above, so just looking at what did trade may not be a very accurate way to tell what market conditions prompted the execution.
Why would someone front run your 400 share order with 1500 shares? It doesnt make sense. HOWEVER...If the 1500 share seller had alot more shares to sell then it would make sense to take your shares. THIS WAS FRONT RUNNING BY A LARGE SELLER not your usual high frequency trader front running with a few hundred shares. Think about it; the big seller has many shares to sell. Hes hoping he can sell on the offer while the stock is going up. But if ITT starts holding below that whole number, the large seller is going to have to start hitting the bids. By using flash orders he can see that there is at least 400 shares that are going to try to hit the bid and hes going to try to hit them before you so he can at least get some of his large order filled at better prices. IN ANY CASE, FUCK THE FLASH ORDERS!!!!!!
1. That poster is a fucking idiot.
2. If he is the "head trader" at a firm that "trains" day traders, it nicely illustrates what a scam it is when a firm offers to train you how to day trade.
SMB is the legal scam here.
Dear Gman,
Trading equities is a risky undertaking made even more so by your delusions . Seek professional help. Did you get the tag of that electron that just ran you over ? :)
Tyler -- Ray Pellecchia from NYSE Euronext here. Naturally, the headline caught my eye, and I asked a couple of colleagues who are familiar with trading to take a look at the video and the market during that time (symbol RYN on 12 Jan.-2010 around 9:36-9:37 a.m.).
First, I want to make clear that this is not from Market Surveillance in NYSE Regulation. If someone wants to bring something to their attention, the best way to do that online is via this link: http://www.nyse.com/regulation/complaintsinquiries/1088808969148.html
Instead, this is the take from a couple of colleagues on our business side:
The customer sent the NYSE an order to buy 100 shares of RYN on a stop at $45.21, at which time the NYSE's market was bid $45.07 for 400 shares, offered 100 shares at $45.10. As you know, a stop is elected and become a market order if the stock trades at the stop price.
In the 45 seconds the order was on the NYSE book, a series of customer cancellations on the offer side and corresponding arrivals of buy orders in response to away market trades moved the NYSE quote up to a bid of $45.21 for 100 shares and an offer of 200 shares at $45.24. At that time, a customer order to sell 200 shares at $45.21 arrived, immediate or cancel. The first 100 shares matched the 100 share limit order at $45.21, and the additional 100 shares immediately cancelled because they could not be filled. This execution elected the standing stop at $45.21. The stop becomes a market order to buy, which was filled at $45.24, the NYSE ask. There was no involvement by the designated market maker (also known as the specialist) in any of the trades in question.
Hope that helps clarify it. I didn't ask anyone to look at the ITT example because it looks like other commenters addressed it. -- Ray
Gotta agree with long-shorty here. This Gman character is a clown. Did you see his size in all his positions? He had 1,000 shares of $2 stocks!!! Hahaha.... I've heard nobody at that firm makes any money, and this just proves my point.
How can this firm try and claim to be the authority on anything when they don't make money?