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Senator Kaufman Getting Aggressive On Dark Pools, HFT
Per a letter disclosed in the WSJ earlier, it appears the torch that Chuck Schumer picked up for a regulatory response on Flash orders is now being carried up by Senator Ted Kaufman over a much broader set of market issues: in fact Kaufman seeks a neutral review of virtually every aspect of modern equity capital markets.
Mr. Kaufman wrote that there are now a series of potential conflicts of
interest on Wall Street trading desks trying to serve both retail
clients and high-frequency firms.
"I request the SEC undertake a comprehensive, independent 'zero-based
regulatory review' of a broad range of market-structure issues,
analyzing current market structure from the ground up before piecemeal
changes built on the current structure increase the potential for
execution unfairness," wrote Mr. Kaufman. In a zero-based regulatory
review, each part of the current market structure would be reviewed
comprehensively, as opposed to a traditional review of one particular
type of market structure.
And the SEC is already taking stock:
John Nestor, a spokesman for the SEC, said he couldn't comment on the
letter, but added: "We are developing plans to more broadly examine
other market structure issues."
Not surprisingly, the primary focus of Senator Kaufman are dark pools:
On the issue of dark pools, Mr. Kaufman questions whether the
more-than-50 execution venues, which include exchanges and dark pools,
are being monitored for both best execution and the national best bid
and offer, as mandated by the SEC. Moreover, he questions whether the
national best bid and offer could even be quantifiable, given the
amount of trading done in these hidden markets. According to Rosenblatt
Securities, about 7% of all stock transactions have occurred in a dark
pool in the past few months.
Zero Hedge applauds the effort for a fair evaluation of all potentially abusive practices and is happy to continue working with the Kaufman staff in providing our perspectives on a variety of issues.
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and is happy to continue working with the Kaufman staff.....
project mayhem goes legit? All good!!
Regardless of who happens to be carrying the torch at any one time there are far more folks that are loyal to the institution of responsible self government than there are those that oppose this concept. Throughout history a powerful few have subordinated the greater public for their own narrow ends. This subordination needs the willing cooperation of those that fill the ranks of various private & public institutions. I am willing to wager that the torch will continue to be passed around just as the power attempts to stifle the flame since there are far too many Indians that remain loyal for the Chiefs to control everything. Especially since the Chiefs cannot operate without trusting some worker bees. After all, they cannot do it all themselves.
The deep strike continues.
Exactly. Many people will cooperate, or at least not oppose, illegal or immoral behaviour for a multiple of reasons, not the least the fear of being fired by the powerful few who are perpetrating the illegal acts.
This is why it's so important that demands for responsible behaviour flow from the top. If a whistle blower doesn't have reason to believe they will be welcomed (or at least protected) by those at the top, they will not blow the whistle.
If the top leadership is part of the illegal activity, or at least averting their eyes, there will be no whistle blowing at all or even efforts put forward to stop the activity.
Why would anyone put themselves in harms way if there is a high probability they will be run over by the train they are trying to stop?
I'll be interested to see where this goes
Second that - He'll need luck, prayers and whatever else he can muster for keeping the backbone from turning into Silly Putty...
The Fed has already created the next bubble. Kohn mouthing the same nonsense as his mentor AG about keeping rates low forever.....(or at least until the next accident that they didn't create). There was seven years between the last two.........I don't think it will take as long this time
It won't. Despite the near heroic effort on the part of ZH and others, the whole gamed system hangs by a thread over a vat of lye. Maybe on the other side, the revolutionaries will pick up the banner and finish the job.
7% is a lot of trade volume when you consider all the rest of the volume was GS BOTS.
sigh. so, when and how do they arrange a sex scandal to take this guy down?
If that doesn't work, there's alway a .50 cal. sniper rifle to take care of any honest dissenters.
I also applaud the effort for a fair evaluation of all potentially abusive practices and am happy to continue working with the Kaufman staff in providing my perspective on a variety of issues.
On my mark, golf claps all around. How very civil :)
It's really good to see the support from another member from the Senate. My fear is that the years it would take to do an independent investigation would not mitigate the damage already being done.
But you've gotta start somewhere, though... gotta throw a party for those Kaufman staff members at some point.
The ESF's actions, by pulling liquidity, also could have been the "push" catalyst for a number of credit
v.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
Sure, we can undertake an investigation, and then act.
Or we can end the Fed NOW, and then undertake an investigation, and act.
I know which one I would prefer.
Do people not see that the Fed has been wholly infiltrated from the beginning! That was 90 years ago!
End the goddamn Fed. We need a one track mind until that mofo is down, done, dusted, history.
Denniger is taking a hit on HFT; although in a very over-simplified and watered down way; http://market-ticker.org/archives/1366-The-Lie-Of-High-Frequency-Trading-Liquidity.html
Excellent article by Denninger.
Cheeky who is your new avatar? I miss the old Cheeky.
Denninger's article is nonsense.
A better measure of liquidity is size of the spread and the number of shares bid and offered at that spread. These numbers have never been better and HFT is largely responsible.
Volume can also be beneficial in that it is easier to sell 20K shares in a 1M share flow than a 100K flow (without moving the market).
His hypothetical traders passing a million shares back and forth are pissing away thousands of dollars of commissions. They aren't doing it simply to make the volume look bigger.
If a 20Ksh limit order hits the market it may scare away liquidity and raise the price, so don't do that. Divide it into 20 1000sh blocks and execute them over an hour.
But a 20Ksh limit order doesn't always raise the price. If it did, it would be easy for a seller to place a large buy order to bump the price, sell a bunch of shares at the higher price and then withdraw the large buy order. If you attempt this game you must beware that the 1st indication your bluff was called will be a 20K fill, sold to you. Now you've got a lot more shares to sell with probable greater market impact and more commissions.
Finally, displayed liquidity is real liquidity and is there for the taking. It may fluctuate second by second but can't be withdrawn in response to your marketable order. So if you see a consistent 5000sh offered, take it and it is yours. Anyone who tries to say otherwise is selling you FUD.
There's more nonsense in there but this was the worst.
CB, what happend to your joker avatar?
Cheers