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Joe Saluzzi Provides Further Color On Program Trading

Tyler Durden's picture





 

Some more insight from Themis Trading's Joe Saluzzi from a video clip with BNN earlier today. Also follows up on his earlier post about program trading in the context of AIG. The part about algorithms looking for bonuses and Lexuses is amusing but morbidly troubling.

 

 


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Wed, 07/15/2009 - 17:36 | Link to Comment Anonymous
Wed, 07/15/2009 - 18:09 | Link to Comment Stuart
Stuart's picture

Yes, I noticed that too.  Was a very good plug for ZH.   Kudos to Tyler et al.

Wed, 07/15/2009 - 17:43 | Link to Comment 3Gonads
3Gonads's picture

 Ok, so again, any trader/scalper knows this is going on for YEARS now.

 

  I still say this co-location right at the exchange is tantamount to selling the right to frontrun. 

 

   They put SOES bandits out of business for doing basically the same thing. In this case the frontrun is on the microsecond level, but so what.  ANY PEEK IS A GOOD PEEK. 1 ms or 1000, its all the same.

   You can try to trade against these bots but you can never tell when they will pull or sweep the other way and cost you more than you made in 10 trades.

 

Wed, 07/15/2009 - 20:02 | Link to Comment Anonymous
Wed, 07/15/2009 - 20:19 | Link to Comment Anonymous
Wed, 07/15/2009 - 21:31 | Link to Comment Anonymous
Wed, 07/15/2009 - 22:14 | Link to Comment Anonymous
Thu, 07/16/2009 - 07:45 | Link to Comment Anonymous
Wed, 07/15/2009 - 22:02 | Link to Comment jm
jm's picture

I'm sympathetic to what you're saying.  I think people get confused by the notion of being there first and frontrunning.  Totally different things.  And I agree that liquidity provision helps small block and uber-small block traders. 

My concern is that too many "liquidity providers" in the market just clog up order execution and change pricing.  For example, imagine a bunch of country line dancers trying to move to Marla's techno-acid funk.  Just too clumsy and falling all over each other causing a chain reaction.

I'd like to know your thoughts.

Wed, 07/15/2009 - 22:18 | Link to Comment Anonymous
Wed, 07/15/2009 - 22:26 | Link to Comment jm
jm's picture

I could press further, but I won't.  I do appreciate you taking the time to reply to umpteen people.

Wed, 07/15/2009 - 20:27 | Link to Comment Anonymous
Wed, 07/15/2009 - 21:39 | Link to Comment Anonymous
Wed, 07/15/2009 - 21:00 | Link to Comment SloSquez
SloSquez's picture

Honestly, isn't HF trading just the next evolution?  Yes it's capital intensive, but so are a lot new technologies.  I have more of a problem with a hedge fund being classified as a bank than I do with "pitch axis thrust vectoring".

Wed, 07/15/2009 - 21:22 | Link to Comment Anonymous
Wed, 07/15/2009 - 21:35 | Link to Comment rahbii
rahbii's picture

skynet

Wed, 07/15/2009 - 22:00 | Link to Comment 3Gonads
3Gonads's picture

 They have simply replaced the time and place edge the floor trader and specialist used to have with a computer.  

 

  That in itself is not so bad, but  this co-locating and gaining an edge simply not available to anyone without very big bucks and infrastructure is heinous.

 

   It's a form of bribery, paid to the exchange , to allow them to get first crack at the data .

   Just because they are clever enough to have pulled this off, does not mean they should be allowed to get away with it in perpetuity.

 

Wed, 07/15/2009 - 22:12 | Link to Comment Anonymous
Thu, 07/16/2009 - 14:13 | Link to Comment Anonymous
Fri, 07/17/2009 - 10:32 | Link to Comment Anonymous
Thu, 07/16/2009 - 00:15 | Link to Comment Anonymous
Thu, 07/16/2009 - 00:37 | Link to Comment FischerBlack
FischerBlack's picture

Yeah, take a look at the stock chart for NYX since the start of 08 until now. They've underperformed the S&P500 by like 25% over that period .They can't afford it, but they have no choice. The market is *broken.* Everything depended on fast liquidity of the smart money. With prop desks blowing up, hedge funds shuttering their doors, and everyone else's accounts down by a third, they have to pay people to trade. It's completely bass-ackward.

Thu, 07/16/2009 - 00:43 | Link to Comment FischerBlack
FischerBlack's picture

My question:

 

Now that NASD is FINRA, will NASDAQ change it's name to FINRAQ? If we can get them to change it, and get everyone to pronounce it 'fine rack', they might be able to build a great, sexy ad campaign on it. With a bunch of fine racks selling the service the liquidty will beat down their door.

Maybe Michelle Caruso-Cabrera will be spokesmodel?

Thu, 07/16/2009 - 13:48 | Link to Comment Anonymous
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