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HFT Is Now In Business Of Frontrunning Each Other's Regulatory Capture
To say that the latest bout of regulatory capture-cum-bribery of SEC individuals by the HFT lobby is getting out of hand, would be like hoping to have your limit bid get hit in any stock without some computer subpennying you to death first. As the below post by Themis Trading indicates, soon there will be no SEC employees left for the HFT lobby left to poach, which is why each HFT firm is now designing new algorithms to predict whom their competitors will poach, and front run said poaching. This explains the installation of collocated "Uncle HFT Wants YOU (and pays big scalped bux)" boxes near the SEC headquarters in Washington. This will soon be followed by High Frequency churning of all the new SEC employees who are hired and fired a few million times each second.
From Themis Trading:
Amazing. An HFT lobby group hires the SEC’s Overdahl. Getco hires SEC’s Elizabeth King. Getco hires SEC John McCarthy, who then hires SEC’s Sadowski. Arthur Levitt, former SEC Chairman is a Getco advisor, and wrote a WSJ op-ed last year defending HFT (neglecting to mention his affiliation with Getco). I hear McCarthy is close to Levitt. I think I have this right. And the sanitized term is “Regulatory Capture”. But we know what he real term is. So does any carbon life form.
I suppose this is acceptable though in a time and place where 7
members of Congress, democrats and republicans, hold fundraisers on the
eve of Financial Reform voting. (Hey guys… ummmm I am voting tomorrow
on Reform; come to my breakfast, and umm…put it in the car….)
By the way, Mel Brooks is a genius, but I digress
Yesterday morning I listened in to an HFT webinar by Irene Aldridge
(google Jon Stewart – Cash Cow) where she tried to change the
terminology of HFT to be ET, for Electronic Trading. See, how can
anyone be against electronic trading (ET)? That’s like being against
progress, airbags, and cell phones. Not to mention that extra
terrestrial dude with the long finger. Rightttttttt.
And RGM owner on June 2nd coined the term “Automated Professional
Trading” to describe HFT’s footstep detection and order-anticipation
strategies. Rightttttttt.
And don’t forget the euphemism “latency arbitrage” (we can see your
big ass coming and beat you there). Which anyone can do. Which is why
firms like cPacket have products that measure HFT speed in sub-micro
seconds (Millionths of a second). Because anyone and everyone needs it.
Rightttttttt.
And stepping ahead of a limit order by 1/1000th of a penny in a dark pool is not front-running; rather it is “price improving”. Righttttttt.
These firms and people care about image, and spinning words. They
care about neutralizing terminology because some PR firm tells them
that is what they need to do. They insult us all. They insist that they
are doing nothing wrong, and that anyone who calls them out on it is
ignorant, or utilizing a “disenfranchised business model”, or more
recently – inflammatory in their language. Ask yourselves this, though:
if they are on the side of fairness, right, and in general doing the
right thing, would they be hiring away SEC staff, and doing so
repeatedly, and smack in your face? Think about it.
Let’s end on a lighter note though. We here at Themis are finally
seeing how the game is played. We now get it. Our mamas didn’t raise no
dummies. This is why we have decided to make this announcement
regarding our own strategy for “regulatory capture”:
From the wires:
For Immediate Release – June 17th 2010:
Themis Trading LLC has just hired away an SEC employee from the
Facilities Managment Group, a sub-division of The Trading and Markets
Division. Walter Crumb, or just Wally, has been with the SEC since
1982, and has held various posts and responsibilities in facilities
management in Trading and Markets; he joins Themis effective June 22nd,
so that he can help clean up all the throw-up, after the firm
collectively attends the Tabb Round Table on Market Structure. Said
Joe Saluzzi, “well, we saw the writing on the wall, that it was
acceptable, and that if we didn’t do it, others would. Heck, if the
exchanges and High Freaks can do it, why can’t we? I mean it’s the same
argument as co-location isn’t it?”
Crumb will be responsible for keeping the restrooms at Themis clean
and tidy, and for making sure that the toilet rolls have that little
triangle foldy thing each morning, said co-founder Sal Arnuk. “We are
very very lucky”, continued Arnuk, “Mrs. Schapiro, Mr. Brigagliano,
three other Trading and Markets staff members, and Wally are the last
honorable servants at the SEC. Wally was the only one we could ummmm…
capture.”
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As the below post by Themis Trading indicates, soon there will be no SEC employees left for the HFT lobby left to poach, which is why each HFT firm is now designing new algorithms to predict whom their competitors will poach, and front run said poaching. This explains the installation of collocated boxes near the SEC headquarters in Washington. This will soon be followed by High Frequency churning of all the new SEC employees who are hired and fired a few million times each second.
Hilarious. I have always loved the word poach, especially in this context.
It's good to be the King
The problem of the market is the traders. Trading is a standardized activity now. Lets GAIs do the work instead. Plus they wont take those insane bonuses simply for sitting behind a desk watching evolution of positions.
sitting behind a desk watching evolution of positions.
Is this some sort of euphemism for Pr0n?
Cramer, it is ok to post on ZH now. We know you are reading.
How much can you know about yourself if you've never been in a fight?
Come on Jim, I want you to hit me as hard as you can!
Keep reading ZH Jim, it is the best, isn't it ;)
GENIUS!
I've never considered that my toilet bowl might be where I deposit all my regulatory capture, but I leave the definitions and terminology to those much smarter than I.
"Man, did you see the size of that regulatory capture from yesterday's take out?"
"Wow, check out the odorific emanation coming from that regulatory capture. Makes the paint peel."
Ot but of interest. This will be where Gold eventually gets taxed.
http://www.forbes.com/2010/05/26/irs-wealthy-audits-offshore-hedge-fund-...
IRS 'Wealth Squads' On The Way
Donald T. Rocen, 05.26.10, 04:15 PM EDT
Newly created exam teams will scrub wealthy taxpayers' hedge funds, trusts and foreign accounts.
Those who by anyone’s measure would be considered wealthy, should be on notice: How you acquired and now maintain the wherewithal to be so labeled may soon be called into question by the Internal Revenue Service. That’s not to say that the questions can’t be answered and the matter closed with no further tax due, but the means to that end could get complicated.
Last Fall, IRS Commissioner Doug Shulman unveiled his vision for a Global High Wealth Exam Group--the latest addition to the agency’s arsenal of compliance strategies. Its goal is to ensure that these high-end Form 1040 filers are not shirking their federal tax responsibilities. While the exact amount of “wealth” that will arouse IRS interest was not disclosed, the Commissioner suggested a threshold in the neighborhood of tens of million of dollars. According to the most recently released IRS estimates, in 2004 there were approximately 47,000 individual taxpayers with a net worth of $20,000,000 or more.
That some of these taxpayers play fast and loose with regard to federal taxes should come as no surprise, given the deluge of news stories last year revealing the extent to which the well-off in the U.S. as well as other countries secreted assets in offshore accounts to avoid the prying eyes of revenue bodies worldwide. By last November, in the U.S. alone, almost 15,000 individuals had “voluntarily” reported to the IRS previously undisclosed foreign bank accounts.
However, as troublesome as this behavior is, it alone is not the principal factor for this new program. Instead, it is the scope and complexity of the tax planning in which such individuals engage that challenges the current exam strategy and dictates a different approach for certain wealthy taxpayers. Gone are the days when Forms 1040 filed by such taxpayers reported for the most part, wages, dividends, interest, capital gains, and perhaps distributions from a law firm, accounting firm, business partnership, or small business corporation. Instead, they now often reflect the taxpayer’s participation in such ventures as multi-tiered partnerships, trust arrangements, private equity and hedge funds, and private foundations. To complicate matters from an IRS exam perspective, many of these entities in whole or in part are foreign based.
To expect one revenue agent to verify that a return reflects the proper tax treatment of such an economic enterprise is unrealistic. Thus, make way for the “wealth squads” from the new Global High Wealth Exam Group. They will be armed with agents with the necessary skill sets to examine these situations in a holistic manner. In other words, the individuals as well as their related entities may be examined to ensure that not only income amounts but also the transactions and relationships from which they arise have been properly accounted for and reported for federal tax purposes. While it will take some time to get this organization fully staffed, there are exam teams already up and running.
This will not be a kick-the-tires type of exam. Instead, think in terms of a major overhaul. Global High Wealth taxpayers and their representatives should expect to confront teams of revenue agents, partnership experts, and international examiners prepared to scrub not only the Forms 1040 and the attached schedules but also any and all related returns. In the background will be specialists in such areas as financial instruments; exempt organizations; retirement plans (whether individually maintained or employer sponsored) and insurance and annuity arrangements. And for those who like to play on the edge, do not overlook the possibility of a criminal investigation agent being asked to join the group. The bottom line is that these teams will have access to whatever resources they need.
Now that the IRS has mustered its resources, the wealthy will have to devise their individual plans of defense. There is no one shoe that fits all. For those comfortable with their past filings, a wait and see approach may be sufficient. For the more “creative” who were inclined to play the “audit lottery,” it may be time to test their resolve. What seemed like a good idea a couple of years ago may be viewed differently today. However, regardless of one’s facts and circumstances, it would be wise to heed the words of the Boy Scout’s oath and “Be Prepared.”
Donald T. Rocen, a member at Miller & Chevalier Chartered, has a general tax practice that focuses on counseling large corporations and other businesses on federal tax controversies. From May 2004 to July 2007 he served as deputy chief counsel (operations) for the IRS.
Who wants to rot in some cubicle in a dingy government basement forever......??
Come out into the light.
And ignore that growing crowd of people carrying tar and feathers.
Themis, experts in High Frequency Trading or is it now Bemis, experts in High quality Fluffy Toiletseats?
I guess this mean I haveto up my perdiction. Google to 50,000/ share, Revised up from $ 19,000. Apple to infinity. Thanks HFT. It's sad.
volume off...melt up algos on....2 tics up 1 down 2 up 1 down...repeat
If HFT'ers are The King, I guess that makes the rest of us Piss-Boy???
Small airplanes
OT-Considering the little people will be out of the way (and noone else to hire except porn freaks), your 't' on your Selectric is stuck and i don't see any reason for paper, we've got a guarantee til midnight tonight everyday of the week, weekends watch out though (no wiping allowed), devils and goblins only work then, are we having Christmas this year? maybe Christmas in July? what has this world come to when you have to frontrun Christmas! <sarcasm off, political correctness off>
Riding a tiger is always great fun, until you have to get off.
Banzai7 image labs are studying this post. Stay tuned....
Just came across this:
HELP WANTED:
http://williambanzai7.blogspot.com/2010/06/help-wanted.html
You should submit this to the Onion.
Those EURUSD bullish warnings have strengthened further today.
Vice versa for the USD index of course.
It seems the current EURUSD downleg has ended.
http://stockmarket618.wordpress.com
WPO doubled in price in a few seconds...I remember visiting the NYMEX Platinum pit when the metal was trading in the mid eighties..a market order comes in and the apparently designated local said "at 92" and the custie got done. Now the machines go quiet for a millisecond and a market order comes in. "Keep your lamps trimmed and burning...." Jorma K (Blue Country Heart)
The heck with co-location. I want my trading AI right here, and it should look like Summer Glau.