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Market Structure Before And After: Hypocrisy Defined

Tyler Durden's picture


Now that everyone is firmly in the "HFT is bad" bandgwagon, not to mention that every single blogger, commentator, journalist, and other fly by night "expert", especially those who were wildly mocking Zero Hedge as it labored tediously to write the script for the latest episode of the Hills, seems to suddenly have an erudite and extensively hyperlinked opinion on HFT and market structure, we thought it would be funny to expose the hypocrisy of all those whose opinion is like a windsock to whichever way the wind of public discontent blows. Obviously here we focus on those who opinion actually matters, not the name droppers who are desperate for page views. And, not surprisingly, we start with that finest example of crystallized intelligence in its purest form, Mary Schapiro.

***Before and after - the SEC

Before:  May 6, 2010, 9AM, SIFMA Compliance and Legal Keynote Address, Mary Schapiro, Chairman, SEC

"In particular, I look forward to discussing the consequences of high-frequency trading...where we sometimes go wrong is in trying to react to and respond to every change or innovation, often before its significance is known - or after it has become too apparent."

After:  May 6, 2010, 7PM

"The SEC and CFTC are working closely with the other financial regulators, as well as the exchanges, to review the unusual trading activity that took place briefly this afternoon."  SEC press release

***Before and after - Academics (Professor James Angel, Georgetown)

Before:  April 30, 2010, comment on SEC Equity Market concept release

"The equity market structure is working better than ever, so don't mess it up."

After:  May 10, 2010

"This is a wake up call and markets are dangerously unprotected..."(quoted in Financial Times)


***Before and after - Exchanges (Direct Edge)

Before:  April 28, 2010 , comment on SEC Equity Market concept release

"Direct Edge believes that, on balance, the evolution of trading strategies and intermediary services now classified as 'high-frequency trading' has brought material benefits to our nation's equities markets."

After:  May 7, 2010, William O'Brien, CEO of Direct Edge, "It's something that no one should be proud of..."

Courtesy of RTL


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Mon, 05/10/2010 - 15:12 | Link to Comment Mongo
Mongo's picture


Mon, 05/10/2010 - 16:46 | Link to Comment Cursive
Cursive's picture


Already kind of reminiscent of the sayings from 1929-1931.  E.g. Herbert Hoover saying how great the economy was....TD/Marla should start compiling these.

Mon, 05/10/2010 - 22:48 | Link to Comment merehuman
merehuman's picture

I  do recall george bush stating  the "Fundamentals of the economy are sound" . Liars all.

Fundamental economy to me is our production and exchange of goods. We werent producing much and certainly using more.

Mon, 05/10/2010 - 15:15 | Link to Comment Sudden Debt
Sudden Debt's picture

A overdose on porn will do that to a man

Mon, 05/10/2010 - 15:23 | Link to Comment Mako
Mako's picture

There is no way to write a computer program to contain chaos... watch jurassic park.  

Chaos is coming, there is no stopping it. 



Updates, sorry my post was not directed at you.

Mon, 05/10/2010 - 16:37 | Link to Comment Votewithabullet
Votewithabullet's picture

watching movies will tell you all you need to know. Y tu mako tambien? 

Mon, 05/10/2010 - 15:24 | Link to Comment Postal
Postal's picture

No, it won't......

Mon, 05/10/2010 - 15:34 | Link to Comment Sudden Debt
Sudden Debt's picture

I'm putting myself up for some testing. As we speak, I'm dowloading all the "Debie does..." for all the states in the US and I'm doing a marathon TV session. I'll keep you updated on the results.

Mon, 05/10/2010 - 15:19 | Link to Comment youngandhealthy
youngandhealthy's picture

Here we go...ZH at its finest...stop "the fascist talk" and you rule. 5 stars

Mon, 05/10/2010 - 15:20 | Link to Comment Leo Kolivakis
Leo Kolivakis's picture

Hold on a minute, isn't HFT good for the markets? Just like speculators who provide liquidity? LOL!

Mon, 05/10/2010 - 15:23 | Link to Comment NERVEAGENTVX

Gotta love the total180 these so called "experts" can make. Personally I think some of these "experts" should keep thier mouths shut if they can't pick a side and stick with it, at least for posterity's sake. Either that or return thier "expert" credentials back to the cracker jack box from whence they came!

Mon, 05/10/2010 - 15:23 | Link to Comment Brett in Manhattan
Brett in Manhattan's picture

Today's scenario invariably plays out on a day when the market opens sharply higher. It closes somewhat, but not alot, lower than the opening.

So, the people who bought at the opening (outsiders) don't make money, yet, the media can trumpet what a great day it was.

Yeah, if you knew in advance (insiders).

Mon, 05/10/2010 - 15:25 | Link to Comment Fraud-Esq
Fraud-Esq's picture

Status Quo skanks who wait for damage to "investigate". They're ALL compromised by their sponsors.

This has been The Meme of the U.S. since the attack on NY in 2001. Rice: we couldn't have predicted airplanes. Banks: we didn't see it coming. FED: Didn't think about that. The truth is, they all lied in real time. Plenty of experts saw it all coming. They just weren't allowed on TV.

This country needs a..

"Department of Critics" who's job is to investigate the Status Quo and everything else that's going well. it needs it's own independent TV station, publicly funded. Greenspan was allowed savior status, propped up by media and their sponsors, which started ALL of THIS. 


Mon, 05/10/2010 - 15:25 | Link to Comment Caviar Emptor
Caviar Emptor's picture

I survived the crash of 2:45

Mon, 05/10/2010 - 15:29 | Link to Comment Boop
Boop's picture

Now there's a T-shirt!

Mon, 05/10/2010 - 16:18 | Link to Comment Boop
Mon, 05/10/2010 - 21:24 | Link to Comment Miles Kendig
Miles Kendig's picture

Dow 12,000 no, 11,00..uh  10?

Mon, 05/10/2010 - 15:39 | Link to Comment aldousd
aldousd's picture

hahaha! funny.

Mon, 05/10/2010 - 19:25 | Link to Comment Hulk
Hulk's picture

A very telling sign of the times.

Mon, 05/10/2010 - 15:26 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Heh heh. 

"Revenge is a dish best served cold."  -MasterShake

Mon, 05/10/2010 - 15:37 | Link to Comment Sudden Debt
Sudden Debt's picture

I thought it was: "Revenge is a dish sprayed over with poison and forefed into the bastards throat"...

I got to stop reading those "get even and score" manuals from our CIA buddies. I wish the pictures wheren't so fun to watch.

Mon, 05/10/2010 - 15:31 | Link to Comment wpw
wpw's picture

No need to blow your own horn.  I had already made that observation on my own.  I'm sure others did as well.

Mon, 05/10/2010 - 17:06 | Link to Comment MsCreant
MsCreant's picture


Mon, 05/10/2010 - 21:01 | Link to Comment Miles Kendig
Miles Kendig's picture

Since you outed your avatar I have had this nagging question.  I wonder if you see what happens when you smoke while saftely ensconced within your avatar?  :)  Honk indeed.

Mon, 05/10/2010 - 15:32 | Link to Comment rsi1
rsi1's picture

nice post.. bring the truth out.. too bad not enough people will realise how many idots there are out there until you stick it in their face.

Mon, 05/10/2010 - 15:37 | Link to Comment Abundance
Abundance's picture

They all lack wisdom and discernment.  Once they are forced to realize their lack of wisdom and utterly foolish thought processes, they've already made themselves look like incompetant piss poor leaders.  Bernanke will have his day sooner rather than later.

Mon, 05/10/2010 - 16:17 | Link to Comment Kataphraktos
Kataphraktos's picture

These jackasses wouldn't be jackasses if they would just preface their "after" comment with "I was wrong. Wrong wrong wrong wrong wrong. So very wrong".

Mon, 05/10/2010 - 16:35 | Link to Comment Brett in Manhattan
Brett in Manhattan's picture

If you watch the William K. Black vid, he says you'll never hear Bernanke, Summers et al admit they're wrong, as doing so would expose them as 60 year old men with no useful skills.

Mon, 05/10/2010 - 16:18 | Link to Comment mynhair
mynhair's picture

Hey Mary!

Check Leo K. for insider trading in LDK today.

Mon, 05/10/2010 - 16:26 | Link to Comment Common_Cents22
Common_Cents22's picture

Taking on HFT is like an average joe taking on a pro boxer.  You'll never land a punch, and he'll hit you 5 times while you reload your next punch.  The liquidity will be the water they pour on you to bring you to consciousness while you are flat on your back.

Mon, 05/10/2010 - 16:41 | Link to Comment Brett in Manhattan
Brett in Manhattan's picture

At this point, an individual trader trying to fight with the computers over pennies deserves to lose his money.

I know a guy who was the CEO of a daytrading firm during the 90s. Even back then, he said less than 5% of his customers showed a long term profit, but they did look cool sitting in front of their multiple monitors displaying charts and quotes.

Mon, 05/10/2010 - 16:29 | Link to Comment USCDoctor
USCDoctor's picture

How much longer does this rally go?

Mon, 05/10/2010 - 16:35 | Link to Comment CorrelationTrader
CorrelationTrader's picture

Here is the illustration of what happened.... Bone heads scratch there heads!! :

(Sorry I don't know where to post PNG/JPEGs in this forum)

Yes, I do listen to pit audio so I had a firsthand account of what happened. There was a wave of natural sellers that initially lead the push and probably triggered some Index Arbitrage selling...Not Jim Crammer's P&G Bad tick LOL. Then the fun starts with Index Arbitrage Algorithms and Flash Algorithms as the pace picked up there was index arbitrage sell baskets that hit the market (Index Arbitrage also buy futures) they got filled pretty quick on the futures no impact but the stock probably a different story this leads to down ticks. So what happens next? Yes, more index arbitrage selling why because the market is on "bandwidth steroids" and the HFT Algorithms turning the gentleman sport of Index arbitrage into a contest of my dick is bigger than your dick... (sorry ladies but that's the ego that goes with an insto trader)... that lead to ACN @ a penny (a Market Makers Algorithms 1 penny better than the best bid) and P&G sub 40....the insane thing is it could have kept going if Natural Institutional buyers (or "buy button ben") didn't step in. Flash HFT Algorithms are just front running thieves with fast cars sporting on slow cars and slow pipes...LOL


And I vote for the index arb sport not HFT.... LMAO

Mon, 05/10/2010 - 16:37 | Link to Comment contrabandista13
contrabandista13's picture

OH FOR CRYING OUT LOUD....! If they outlaw HFT, they're going to have to take my server from my cold dead hands.... what are they going to outlaw next... male prostitution....?

This is ridiculous.....!



Mon, 05/10/2010 - 21:22 | Link to Comment Miles Kendig
Miles Kendig's picture

I gotta wonder, what would you do with me & Iz?

Mon, 05/10/2010 - 16:41 | Link to Comment Waterfallsparkles
Waterfallsparkles's picture

Why do the Regulators allow the Computers to Frontrun everyone any way?  How is that legal?

The Crash goes to show you the real problem with HFT.  They frontrun and pump the price on the upside and frontrun and DUMP on the downside.

There is no safety in the Market with HFT.

By the way if they are going to put in Circuit Breakers to the downside what about to the upside?

HFT exasperates moves to the upside and downside. 


Mon, 05/10/2010 - 16:46 | Link to Comment LeBalance
LeBalance's picture

Get rid of the casino, that solves a "next layer down" problem.

Mon, 05/10/2010 - 16:48 | Link to Comment thomas_anderson
thomas_anderson's picture

Integrity and consistency are a rare commodity in this back-asswards upside down world we live in.  However, all things move in cycles and this unsustainable fantasy world we live in will not continue forever.  There are certain universal truths that can not be repealed forever no matter how hard TPTB try to make it so.

Mon, 05/10/2010 - 16:51 | Link to Comment Ophiuchus
Ophiuchus's picture

A real good naked con may only be played once. The backstage made a cool half trillion on the Thursday 6 alligator swindle.  I wonder what they’ll pull out of the white hat next? Ride the wave baby! Its gona be a wet and wild banana ride. So, don’t let them turn your thoughts against you, player. 


Mon, 05/10/2010 - 16:57 | Link to Comment CorrelationTrader
CorrelationTrader's picture

"Mortimar turn those machines back on"... :)

Mon, 05/10/2010 - 16:58 | Link to Comment Comrade de Chaos
Comrade de Chaos's picture

Golden rule of living under the socialism # 1:

Visibly embrace all of the rules of the socialism, while never forgetting that all of them are total BS that could not be relied upon.  

rule # 2: Be prepared for the failure of the socialism and to rip rip related opportunities as the result (Privatisation.) Warning, never ever share your doubts because living in the socialist society is not about sharing (it's about entitlement.)

rule # 3 : Pray that the time to implement the rules # 1 and 2 will never come.



Mon, 05/10/2010 - 20:49 | Link to Comment mtguy
mtguy's picture

Whoa, there Comrade. I dare say we need to reflect on rule #2. A good socialist always shares with his less fortunate brothers and sisters, so that those with more have less  and those with less have more. In the end we will all be one, one happy family, one happy country, and of course, one happy world.

In fact, while I'm thinking about it, anyone got a room they can spare? I don't eat too much and I have pretty good hygene, most of the time.

And, as 'Hopey' would say, it is fair and the right thing to do.

Mon, 05/10/2010 - 17:15 | Link to Comment cbaba
cbaba's picture


Mon, 05/10/2010 - 17:58 | Link to Comment rubearish10
rubearish10's picture

And,,,after today's +404, they say "We never really thought algo's and HFT's are dangerous"

Mon, 05/10/2010 - 18:44 | Link to Comment Kina
Kina's picture

Professor James Angel, Georgetown

Professor = dumbest man in the room

Mon, 05/10/2010 - 18:48 | Link to Comment lucky 81
lucky 81's picture

go ahead and back up or thats right go left.

thats easy for you to say.

Mon, 05/10/2010 - 18:56 | Link to Comment Rick64
Rick64's picture

The masses can't remember last week let alone months or yrs. ago, so I don't think most of them realize the hypocrisy that is so obvious. Turn off your t.v.s and watch your intelligence increase at a rapid pace.

Side effects include:

1. Readily able to recognize blatant bullshit.

2. Better decision making.

3. Less irritation.

4. Unable to talk about results of "Dancing with the stars that can't get any good gigs but still need the limelight".

5. Much more free time.

6. No ADD syndrome like symptoms.

There are others below in small print (very small).

Mon, 05/10/2010 - 19:35 | Link to Comment johngaltfla
johngaltfla's picture

Dear Tyler,

As one who doesn't need the hits and does this as an observer, I want to be one of the few to THANK YOU. Your education on HFT was what I referred people to because you had the inside understanding of how the large houses functioned and warned not one week ago, not two weeks ago but ages ago on the dangers of this practice of allowing the leeches upon the trading platforms of the various markets.

Your education made me realize that there is only a few winning strategies and that traditional TA was as useless as Tits on Hillary Clinton to a heterosexual male.


You da man,


Mon, 05/10/2010 - 20:20 | Link to Comment Trifecta Man
Trifecta Man's picture

Damn it, Jim!  I'm a SEC Chairman, not a Scam Preventer!

Mon, 05/10/2010 - 20:27 | Link to Comment Cistercian
Cistercian's picture

 Mary Shapiro is crystallized intelligence in exactly the same sense that kidney stones exist.(very painful manifestations of pure waste)

Mon, 05/10/2010 - 21:00 | Link to Comment Apostate
Apostate's picture

The pathetic thing is that after the crash of LTCM that people would still be suckered in by the algo crowd.

It's like they really fucking believed that their connections would protect them from institutional investor rage.

Mon, 05/10/2010 - 21:48 | Link to Comment digalert
digalert's picture

I thought the reason SEC turned to porn was because folks like ZH were doing all the work for them.

Mon, 05/10/2010 - 23:35 | Link to Comment Rich_Lather
Rich_Lather's picture

Now that everyone is firmly in the "HFT is bad" bandgwagon, not to mention that every single blogger, commentator, journalist, and other fly by night "expert", especially those who were wildly mocking Zero Hedge as it labored tediously to write the script for the latest episode of the Hills, seems to suddenly have an erudite and extensively hyperlinked opinion on HFT and market structure, we thought it would be funny to expose the hypocrisy of all those whose opinion is like a windsock to whichever way the wind of public discontent blows.

That's one hell of a long sentence. Surely, you could have squeazed in just one more snarky comment before the period. Your newsworthyness is grand, but your writing, your particular writing needs improvement. Not all of the smartass comments whirling around in your head are worthy of print. Prune the weaker ones.



Tue, 05/11/2010 - 01:13 | Link to Comment MsCreant
MsCreant's picture

Consider your comment pruned, marked out. Too bad you don't feel passionate about anything. Too bad you are rigid. Stay inside the narrow boundaries you have confined yourself to. Got news for you, you won't be safe.


Tue, 05/11/2010 - 02:05 | Link to Comment Miles Kendig
Miles Kendig's picture

If ya wanna write it by all means write it and create your site insert that effort as its first content and please do so because I am wondering if you do have an actual impression of what was conveyed by the writing of the article which is what those that write and read these threads generally occupy themselves with or are you just wanting to see if you could find someone that wanted to play pupil to your esteemed teacherness as inquiring minds mine among many other late night viewers would like to know how it is someone such as yourself would desire to try and tell someone that has actually established their own web site and the content that goes with how to do what they are doing without telling them what you think of what they wrote all the while failing totally and utterly at providing a link to your own content which is why I made the observation I did about you maybe considering what it takes to actually create content and a place where it can be examined by someone that just wants to talk about how they would wish you would talk to them because they way you talked to them upset their views of propriety and sensible conduct and communication between persons in our society

Had enough or would like to continue there Rich?  Besides, for someone that cannot spell passing along grammar tips seems rather funny.

Tue, 05/11/2010 - 02:30 | Link to Comment Howard_Beale
Howard_Beale's picture

You had me at if you the history of long sentences, I think you have possibly won the gold medal.

Tue, 05/11/2010 - 03:24 | Link to Comment Miles Kendig
Miles Kendig's picture

What the hell.  It's the content and if it is a little bumpy then send a note to the zh tips email and leave the threads for actual comments.

Tue, 05/11/2010 - 01:25 | Link to Comment Miles Kendig
Miles Kendig's picture

One of the reasons were find ourselves in the predicament we do is because so many opinion makers and shapers seem to be more concerned with acceptance that with honest, vigorous examination of the topic/s at hand.  No wonder there are such problems with proper attribution within so many professions and with the absence of personal responsibility within these circles of policy makers & shapers.

Tue, 05/11/2010 - 02:03 | Link to Comment MsCreant
MsCreant's picture

Yes men and women are put in charge, in the first place. Depend on them to not want to make waves is what I hear from your comment. They are useless as enforcers. Check. Good night Miles.

Tue, 05/11/2010 - 02:29 | Link to Comment Hephasteus
Hephasteus's picture

I am much more interested in the "Zero Hedge doesn't understand the treasury market" crowd that hit you guys last year.. They were much more interested in covering up at any cost what you were outting.

The problem is that the situation warranted using HFT to it's fullest destructive intention. And this year we will see the use of treasuries and bonds to their fullest destructive intentions.

Drop your drawers world. Time to see the whole of the moon.

Tue, 05/11/2010 - 03:00 | Link to Comment Howard_Beale
Howard_Beale's picture

Great image for the Zazzle store to benefit ZH--Tyler fully approved fundraiser. Do a little windowshopping. Something might float your boat.

I may have to have some fun with a moonshot at QE.

It's your ideas that make it work.

The latest at the Zazzle store and for the European audience we have you covered:


Tue, 05/11/2010 - 08:32 | Link to Comment youngandhealthy
youngandhealthy's picture

What really annoys me is that in September 2009 (if I don't remember wrong) the SEC were out talking/Proposing a ban on Flash Trading. Also some of the exchanges (NASDAQ) "said" that they voluntarily would give up FT. WHY is the FT practice still here/allowed?  I'm not a US citizen so I can not protest...but for god sake all you Americans out there...go after the SEC or anyone that "supports" front-running. It is fraud.

Tue, 05/11/2010 - 07:08 | Link to Comment theprofromdover
theprofromdover's picture

Look, the real beef is with mainstream media.

Their purpose in our society is to act as the counterpoint to those in power, on behalf of the peeple. Unfortunately They have been bought -lock, stock & barrel.

But they can be unbought.

MSM have all the dirty on every play action and every corrupt or depraved player in this game. They could bring this house of cards down in a month.

About time they woke up and saw who pays their bills -us.

Action against the evil empire is well over-due, and it will come thru your TV.

Do NOT follow this link or you will be banned from the site!