Interactive Brokers' Peterffy Lashes Out Against The Broken Market, As Nanex Conclusively Proves HFT's Were Cause For Flash Crash

Tyler Durden's picture

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Mongo's picture

HAH, you can take that to the SEC...

cossack55's picture

Take a cartfull of downloaded porn also, that way they won't have to work so hard during business hours.

Porkbellytrader's picture

Bring back the pits and the floors, bitchez!

vanorton's picture

agree with you, if you are/have been there i guess you have seen "Floored".

dont know if it has been posted before, nevertheless its a "must see"

http://tinyurl.com/26ww4sg

 

 


plocequ1's picture

A little too late. Dr. Max Keiser and Sir Gerald Celente said this a couple of months ago. 

bada boom's picture

cannibalize itself very, very soon?

As long as the fed is creating food, junk food that is, no need to cannibalize.

SheepDog-One's picture

All the Twinkies in the world doesnt matter to a starving man, still starve to death while bloated after gorging on sugar high empty Twinkies.

sweet ebony diamond's picture

Don't forget the conflict of interest issue.

I am speaking about Goldman's financial enema retail services.

Goldman says they have only your best interest in mind as you hand them your life savings.

Then it disappears.

RobotTrader's picture

What's up with Amanda today?

Looks like she is wearing a straight-jacket today.

LOL...

Ethics Gradient's picture

Watching this is like watching someone overwind a clock to keep it ticking.

October 08 was a call to arms to anyone who had it within their grasp to do something about the future. It was fudged and forgotten for the sake of a few politicos careers and the idiot bankers who felt that they could and should play god.

All the while, the general public lives on in ignorance; faces buried in facebooks trying to stimulate their senses by giving away as much privacy as they can bear. As long as no-one bets the farmville, everything will be OK.

Now the spring on the clock is as tight as it will go. Nothing has been remedied and there's no plan B.

Maybe, just maybe, they can fix it all with just one more turn on the spring...

 

SheepDog-One's picture

Thats right, all these whiners who now see their business hurting were ALL FOR the FED's print and pump intervention policies 2 years ago! Should have spoken out against it then, you youre in deep trouble OH WELL sucks to be you!

Ethics Gradient's picture

I may have misunderstood, but I don't think I agree with that one.

At the time it was print and pump or time to call in CDSs.

There was an opportunity to resolve an awful lot of problems, but it would have been extremely painful. There would have been squid ink everywhere. They opted for what's coming next instead.

MrTrader's picture

Amazing how many idiots Paulson and companions have found on their way to armageddon.

TimeToChange's picture

"In summary, the buyers of the Waddell & Reed e-Mini contracts, transformed a passive,  low impact event, into a series of large, intense bursts of market impacting events which overloaded the system."

The SEC's report says some of this.  Andrei Kirilenko's paper says exactly this.  See http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1686004

 

wiskeyrunner's picture

Oh know stocks are up again, to bad all the doom and gloomers here just stand around kicking the dirt and mutter under there breath as the rally powers higher.

Sudden Debt's picture

They are waiting for the DOW to hit 200 before they want to step in :)

SheepDog-One's picture

And you havent made a dime until youve sold, all youre looking at is on-paper profits, so the tale of those who count their chickens before theyve hatched comes to mind here before the mother of all bagholder events plays out one day soon. Be quick on that sell button whiskeyguzzler! You might find an umbrella in a tsunami doesnt do very much good!

homersimpson's picture

Spoken like a true bulltard. Your name again - what was that?.. Dumm hass?

Kat's picture

Peterffy lashes out against that which is not advantageous to his business and glorifies that which is.  How shocking.

Of course Peterffy benefits if all trades have to come to him first on a centralized exchange where he is a powerful enough to have the rules written to favour him and screw all the customers.  Those HFT guys are the natural enemies of Timber Hill and, as usual, this blog and the public know to little about how the sausage gets made to see through his thinly veiled rent seeking.

I will garauntee you one thing and one thing only - nobody will be providing you bids in a crashing market without getting major exemptions from the rules you're bound by.  That's why you didn't see any on May 6th and you won't want to pay the price for liquidity if Peterffy gets his way.

 

 

 

Tyler Durden's picture

It would appear that many are willing to pay for true liquidity, not the volume churn that the SEC and the HFTs are pretending is equivalent to true order depth. As for his rent seeking, many would also be willing to pay that as opposed to the much greater rent already paid to HFTs and internalizing brokers who provide nothing of value.

Kat's picture

Lofty words.  But, what you completely fail to understand is that the SEC has been busy crafting rules that suck liquidity out of the market.  That's the effect you're seeing.  The HFT shops are just the last man standing (except for the large, politically connected firms who can stop investigations of outright fraud by their SRO's with one phone call). 

There is no rent paid to the HFT's except the rent they create by having technology fast enough to take advantage of inefficiencies.  Most aren't even market makers and don't have the piddly exemptions.  The SEC has driven out everyone on whom you would like to rely to provide liquidity by making it too expensive to do so.  HFT's are the only ones that can survive. 

You also don't seem to grasp the concept of rent seeking very well or understand why people do it.  If the rent were greater in running an HFT shop, that's what Peterffy would be doing.  His advantage is leveraging America's ignorance of financial markets and the 9 million regulations that screw them at every turn (in the name of protection, of course) to his benefit.

Tyler Durden's picture

Somewhere in there you confirmed, I believe, that there is no liquidity left in this market. Thank you for that

i-dog's picture

"If the rent were greater in running an HFT shop, that's what Peterffy would be doing."

I wouldn't rule that out yet. "First they revile you. Then they call for legislation against you. Then they join you."

Sudden Debt's picture

Anybody watching BAC? :)

It looks like my friday call are working pretty hard right now :)

plocequ1's picture

Dow up 87. Hft is in full vigor. Let me know when there is a roadblock. In the mean time, Dr Bernanke says, Buy stocks and shut the fuck up.

SheepDog-One's picture

THE CURE for this crooked broken market is SIMPLE! Each trade must be made with a CAPTCHA correctly answered before the trade is executed! CASE CLOSED!

Dapper Dan's picture

Hey Thomas Peterffy were you a student of Black-Scholes?

" I must confess to you that I was an ardent proponent of bringing technology to trading and brokerage"

Mandelbrot was  highly critical of the world banking system, arguing the economic model it used was unable to cope with its own complexity.

wiskeyrunner's picture

Buy December sp 500 futures, make free money, the stock market will power higher till November 4th.

trav7777's picture

translation:  no brokerage fees boo hoo

janchup's picture

What's the payoff to SEC for intentionally doing a horrible job? Of course, they realize the American public is too clueless and distracted to really care but that's no excuse for a fabrication such as they presented regarding Flash Crash. So what is the payoff?

hbjork1's picture

Payoff?

"If I do nothing, maybe it will go away."  "If it doesn't, wait until the public outcry gets loud enough so that we can go after the perps with minimum backlash."

StychoKiller's picture

Round up Martha Stewart and the "Usual Suspects!"

Edwardo's picture

"...to make the process more efficient."

That may be the single biggest B.S. reason given to turn functioning industries-how many times have we heard this clarion call, "we need it for efficiency" into abbatoirs.

StychoKiller's picture

Meat grinders are efficient too, but I wouldn't wanna stick my hand in one!  Good point on your part!

NOTW777's picture

simple - outlaw HFT.  dont give me any crap about liquidity.  its fraud and unfair competition.

good for IB ceo

whomever is doing HFT last 6 mos should be banned from trading for life

TimeToChange's picture

"During the Flash Crash, the trading behavior of HFTs, appears to have exacerbated the downward move in prices. High Frequency Traders who initially bought contracts from Fundamental Sellers, proceeded to sell contracts and compete for liquidity with Fundamental Sellers. In addition, HFTs appeared to rapidly buy and contracts [sic] from one another many times, generating a “hot potato” effect before Opportunistic or Fundamental Buyers were attracted by the rapidly falling prices to step in and take these contracts off the market."

Kirilenko et. al., "The Flash Crash: The Impact of High Frequency Trading on an Electronic Market," page 2.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1686004

 

 

Buttcathead's picture

LOL It aint even fraud anymore.  It is just flat out free money for banksters.  Americans are dumb as hell.   They are just going to go bankrupt and then starve to death.  The future is so bright I am setting myself on fire. 

DosZap's picture

THis is like saying I am sorry, after you have been caught.

Not really sorry, just sorry your caught.

I do not see how any of you could trust them ever again.

Not me.

No More Bubbles's picture

It is vitally important that we bring an end to this crisis of trust before it spreads any further; that we bring back order, fair dealing and trust in the marketplace."

Too F*<king late!

NotApplicable's picture

No doubt! Like I'm going to trust any regime after this one...

Vampyroteuthis infernalis's picture

The sad reality is they will clean up this fraudulent mess after it is too late. The market will have crashed wiping the vast majority of investors out. Day late and a dollar short.

MarketFox's picture

IB was the best thing that ever happened to the RETAIL business....bar none....

The other RETAIL boxes such as Schwab, Amertrade, Scottrade...and others ...are an expensive JOKE for RETAIL....just as Peterfly just mentioned....

But we are the age of the INTERNET...and the internet has radically changed the securities business....

And yes...there is a better business model....ie based on the BATS model....especially in European stocks....they rape their customers...they are deftly inefficient....

 

The new structure has to represent RETAIL in a real virtual way...

1) Defragment the exchanges...

2) All public instruments must trade on the exchange...

3) There must be size limits....

Why ? What makes for a better marketplace...a billion RETAIL accounts pressing their own computer buttons backed by fact based wiki data instead of the public media propaganda that is paid for by those who have other ideas...and a handful of large self fulfilling account master bastards....

 

Banks should be allowed to service RETAIL...not game RETAIL....

 

Also ...this bullshit about RETAIL not being able to go long short is just that....

Any account should be able to go both ways....

...........................

Furthermore....the US is at a real crossroads...

One major problem is better distribution of wealth....and another major problem ...is to re create RETAIL....

Because in all honesty...the Blankfein ilk has totally fucked up the markets...

Lots of heads belong on poles...LOTS OF THEM...

...................................

In short ...the US has got to dramatically reduce govt....and dramatically increase entrepreneurism...and the distribution of wealth....

The govt...and its big bank fascist bullshit need to step aside....

ella's picture

Is the author worried about the public perception and lack of participation?  Sounds to me like he is beginning to worry that the rest of the market players no longer trust the markets.  Now that is something to worry about. 

Diidier's picture

I endorse that quote :

"the financial markets are a con game"