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JPMorgan's Views On The Five Best Things About The Flash Crash
In this surprisingly candid and objective JPMorgan report, which looks at the consequences of the Flash Crash, the author shares his opinion on the five positive outcomes to arise from the flash crash (including stock specific circuit breakers, bringing more balance to the HFT discussion, proposal requiring HFTs to at more like the floor specialists they are replacing, discussion about "co-locations" and that cheapest does not mean best) while concluding that "the HFT industry may have gotten ahead of anyone’s ability to understand and monitor its capabilities and consequences" and may have resulted in a more fragmented marketplace in which liquidity is temporal, and in less incentive to display limit orders or contribute capital to market-making. Yet the most glaring observation is that investor confidence, already at unprecedentedly low levels, has plunged as a result of the flash crash. Over the past year we have repeatedly disclosed who the culprits for this condition are, yet the SEC, in its perpetual pandering to future private sector employers once again proves that its mission statement, which claims that "its duty is to uphold the interests of long-term investors" is a bold faced lie, and until resolute steps are taken to curb the daily manipulation and outright marauding by various binary pirates and algorithmic kleptos, we suggest that the SEC's budget be cut to $0 as the agency continues to perform none of its chartered duties.
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#1 Best Thing:
The Flash Crash has so thoroughly discouraged "average investors" that they are leaving the stock market in droves. Now we, JPM, and all of our crony TBTF banks almost completely control the equity markets through our HFT desks. We should have no problem reaching our goal of 100% profitable trading days for Q3.
This is wild.
If you scalp high volume on both the long and short side... which is the basic idea behind HFT... it's not unusual to have nearly 100% profitable days. SERIOUSLY. Observers who point to this as a sign of "cheating" don't understand how flex market making and HFT work.
I trade 200,000 shares/day... and scalp 40,000 shares/day (defined as buy and sell on the same day). My same day scalping is profitable >> 95% of days. I'm sure the Big Players can do better, baby.
Cheating is, in fact, rampant... but diversified market making firms like Interactive Brokers, for example... do approach 100% daily profitability. If you scalp 100,000 times on both sides of the market you are basically capturing the spread and printing money. And there are lots of securities with decent spreads.
And there is really no such thing as an "average investor". There are Pros... and everyone else = mooks = fish = sheep. To a non-professional the market is random... less fees less every conceivable form of cheating and deception (that Pros mostly avoid).
Good stuff. Thanks.
If you want justice go to a brothel. If you want to be screwed over go to the SEC.
Anyone that thinks that the SEC, or any other alphabet Govt agency exists for any reason other than justifying spending tax payer currency is completely deluded.
The author uses the term post-modern. I knew at that point he was a dbag.
Banking is an "art".
Post-Modern means after the Second World War.
For your edification without the sarcastication of your immodulation. (Keep your "Label Filter" as long as you can, my friend. I hope it brings you wisdom...)
Yeah.
Meaning.....Post modern meaning after the second world war....
Which would be an abstract way of looking at banking.
And I have no idea by what you mean after that.
I've never seen squeezes like this before....
Unreal....
doesnt take much - QCOM looks interesting after it settles down
http://seekingalpha.com/article/214491-verizon-iphone-could-boost-qualcomm-s-stock-by-4?source=yahoo
A Strategically Placed Finger...
On that bright red chart and a little down tug... and something(s) will pop up out of that chart ready for action...
I am disinclined to agree with the statement that it was the U.S banks "stress test" that served to mark, or, have anything to do with the "inflection point" for domestically located banks.
I am encouraged to believe that it was the FED printing money, buying debt off the balance sheets of it's emisarries, and blasting the market with liquidity created ex nihilo. It just so happens by coincidence or not that QE occured around the same time.
It is these types of shape-shifting illusory correlations that discourage the cockles of my capitalistic heart. It is either misunderstanding, manipulation or some hybrid coupled with complete incompetance that not only lead us into this depression, but also the type of thinking that will keep us firmly implanted in the depression trench we currently find ourselves mired in.
I POSTED THIS YESTERDAY...
http://www.zerohedge.com/article/volume-always-speaks-volumes
And to what are you referring? I don't have the time nor inclination to puruse through all those comments.
The whole article?
.
mista dobalina.
mista bob dobalina?
the funkee homosapien!
dig the name!
i posted the whole article...
So everybody has noticed the correlation between platinum and equities, ie Nikkei, right? Right???
Platinum is about to decouple......finally!
hopefully not in the same manner greece decoupled.
So the Fed releases bad news, now the Fed's retail arm JPM does the same.
Ok what stupid plan is the Fed setting up for the sheeple and CONgress to buy into this time around?
So according to this article:
Japan is 30% screwed vs. Europe who is 40% screwed...or on average only 65% away from no human keeping the balance.
Fuck, I though floor traders were scumbags but at least they weren't smart...algorythumly-mathmatically-automagically speaking of course...
circuit breakers, meh.
"...we suggest that the SEC's budget be cut to $0 as the agency continues to perform none of its chartered duties"
Yes, ever since Cameron indicated that the British gov't was going to abolish the FSA, I thought that it would be a beneficial precedent on these shores. Sort of like Patco, but in a different way. However, in both cases, the job wasn't getting done, and I would argue that if the SEC's failures to get the job done are not legally criminal, they should be.
Thanks for posting this good article.
I'm surprised that JPM publishes a view that is not extolling HFT. I thought they were all the same: bonus oriented money maker without much regard to the safety of the system. I guess people are different even within JPM.
Another thing that surprises me is that JPM actually thinks of trillions of asset under management. Afterall, when you have that much money under management. You don't want the value be manipulated. But then I'm not sure whether JPM is clean on that.
Why other big asset managers don't come out and denounce HFT? The JPM view seems to be minority on the street.
Back in July 2009, I was disgusted by a comment by the FT's Lex: http://www.ft.com/cms/s/2/0119c586-7b7a-11de-9772-00144feabdc0.html
For those who don't subscribe, you may find it here: http://fotosaver.com/ft26
I wrote to their Editor and got the following reply:
<<
I am writing in response to your letter regarding the Lex note on flash trading. Just to be clear: we specifically said that frontrunning - or trading ahead of customer orders - is illegal. We do not therefore believe it's "quite in order".
As my Lex colleague notes:
Flash trading is not the same thing as front-running - despite what some of the coverage in some competitor papers has implied. It is really a bid for greater efficiency (and for competing exchanges to try to win market share) by giving orders a chance to be filled within the exchange that they are placed. If that happens it actually saves the person placing the trade money (because they don't have to pay for it to be routed out).
If people mis-use that information, then they would be on the wrong side of the law. But that is true in many areas. Also worth noting that you CHOOSE to have your order flashed. If you don't want it to be flashed, you can simply opt out or use a different exchange.
We also said that the SEC's look at this area is welcome (and that in fact it should be broadened out to include HFT in general and dark pools) because there may be investor protection issues (mainly between the technological haves and have nots). The technological have-nots are not simply retail investors by the way. Large institutions and hedge funds find HFT complain because they are trying to time the market the old-fashioned way and the algorithms make their life very difficult.
The Financial Times fully understands that retail investors and middle class savers have lost a lot of money in the financial crisis. We have documented
this - and we have been very criticial of the banks who sold duff products to savers. I am happy to provide you with evidence.
In sum, I wonder whether I can persuade you to reconsider your decision to cancel your FT subscription. Your support, as an informed reader,
is most valuable.
Yours sincerely,
Lionel Barber
Editor
>>
I guess that what happened since was perfectly predictable - not the timing, but the event
Nice Summation, Tyler:
"to curb the daily manipulation and outright marauding by various binary pirates and algorithmic kleptos, we suggest that the SEC's budget be cut to $0 as the agency continues to perform none of its chartered duties."
SEC on Commission
Fire the entire Schapiro douche bag of regulators and offer independent contracts to attorneys and analysts on commission...
Commission paid for money recovered by finding and proving fraud cases. The incentive would be to go after the big cases and the big fish that do the damage...
Schapiro's Douche Bag of Regulators
Instead of Schapiro's douche bag of regulators that spend all day:
1. Downloading tranny and kiddie porn.
2. Deliberately tanking Bear Stearns cases...
3. Chasing $750 of alleged insider trading cases...
4. Ignoring TBTF $$Trillions in fraud for future job prospects....
Schapiro's Douche Bag Pun Intended
As I can think of no one and her staff who need a vinegar and water cleansing more...
As warned about for some time... EURUSD daily chart is bullish.
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