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Next Up On The US Attorney's Radar: High Frequency Trading
While running and hiding is easy for carbon-form based hedge funds, it may be a little more difficult for collocated servers: they tend to be welded to the ground. Yet running and hiding may be precisely what they need to do soon. After Manhattan US Attorney Preet Bharara is done disassembling SAC, his next target will be ZH's favorite topic: high frequency and prop trading. Which is sad - we may have to branch out into sports and pornography soon, as all the topics we had been covering for years are one by one tabled by the those whose job it is to fix the fraud in the markets. Joking aside, here is what the NYPost had to say: "Computer-driven trading shops and independent proprietary trading firms may be the next to feel the heat from watchdogs aiming to clean up Wall Street, source tell The Post. Federal agents, who have ratcheted up the heat on insider-trading rings linked to hedge funds and investment firms, are also are targeting firms that purport to offer individual investors specialty trading techniques employed by Wall Street powerhouses like Goldman Sachs, these sources said." We, for one, can't wait to listen to the Jon Stewart's Cash Cow upcoming interview from a NYPD holding cell.
More from the Post:
These firms, which claim to offer market access that typical investors aren't privy to, are being eyed because they may be helping bad actors conduct flash trades that could be tied to insider-trading activity, sources said.
In a speech last month, Manhattan US Attorney Preet Bharara hinted that federal prosecutors are closing in on high-frequency traders and so-called proprietary trading firms.
"When an institution or a trader can jump in and out of positions at the speed of light and in enormous volumes, illicit trades become easier to mask, harder to find, and subject to plausible deniability," Bharara said.
Oh well, perhaps the robots can create an expert network all for themselves so they can get advice on exit strategies. Keep an eye out on explosive (outbound) Fedex shipments of toner cartridges with petaflop processing capacity and market "flash crash" inducing capabilities.
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I am all for shutting down the fast computer trades....either buy making them illegal..or buy making a trade hang for an hour or two..it distorts the markets to stuff trades....or have a trade for only 1/10th of a second...
But...But...But...
GS just spent 250 million on the Borg Mothership...
precisely why it's neccessary for GS to sic their inforcement arm on the competition.. it's getting tougher for them to conduct their fraud with all these small shops popping up.
Well fuckingOOPS...
Goldman’s plans appear to have sent city and state officials into giddy ecstasy. They quickly agreed to give the company a hundred and fifteen million dollars in tax breaks and cash grants to build the new tower. More singular still, state and local governments decided to give the firm another big subsidy by letting it use $1.65 billion in tax-exempt Liberty Bonds, intended to stimulate economic development after 9/11, to cover part of the building’s $2.1-billion cost.
Read more http://www.newyorker.com/arts/critics/skyline/2010/05/17/100517crsk_skyl...
How long until Bharara is linked to a prostitution sting operation?
before he wakes up drunk in a motel room with a bunch of naked young boys, that's how I would go about it.
Clean up Wall Street? Now that IS funny!
Ok, would it be so wrong to force a 1 or 2 second delay on all submitted trades?
"...may be the next to feel the heat from watchdogs..."
Then again, they may not. Goodness, which is more likely? Lloyd? Jamie? Anyone?
Looking forward to machinima testimony, from a virtualized Sergey Aleynikov.
Will he look like a teddy bear or a cubicle rat?
Yea right, the investment houses in NYC own the Justice dept. This is such a farce.
Any cowboy who doesnt play ball will get disappeard a.k.a "Spitzer'ed"
Spitzer, you dumb fuck ..
Client no. 9 knew how to play hardball and win against the Banksters, and he loved doing it. Just the sort of person we need.
I don't blame him for not keeping his dick in his pants - plenty of men have that problem: not enough blood supply to think and enjoy themselves at the same time.
But to break the law, in a premeditated way, with the Rethugs just waiting to get him all the while ... damn it all to hell.
After l'affaire Spitzer, didn't that whore stay for "free" in an apartment owned by Jim Chanos?
http://caraellison.wordpress.com/2008/03/18/enron-shorter-jim-chanos-bef...
Managed timber my boys. The new frontier for HFT is managed timber
Obama's re-election campaign is cranking up - a few wall st. perp walks might satisfy the botton 80%.
But without some top banksters going down, its just lipstick on a pig.
If the other side also touts wanting to do perp walks, the allure goes away and we're left with a laughable report card from someone who promised so much. My guess is that virtually anything the president attempts at this juncture for remedial action can just as easily be utilized by another person/party and credit for the action taken from mr. obama. But, then again, it's just theater for the morts.
It’s hard to see how one could effectively use HFT—which by definition is afundamental and where you never hold a position overnight—to effect an insider trading scheme, which depends on taking a position in accord with fundamental info the schemer is privy to ahead of everyone else and then holding it through the denouement.
Personally, I wish the prosecutors would look at naked short selling. Much harder to hide, clearly criminal, and manifestly much more pernicious than HFT.
High frequency trading...Hmmm. How many years have they waited to be concerned about this, while the smartest physicists in the world were hired to computer-game the money system? 60 Minutes, late to the issue, contacted a bunch of hedge funds that use HFT for an interview and were given an interview with only one. The people are like Dracula afraid on the light. It's time the big heat was turned up.
Which is sad - we may have to branch out into sports and pornography soon
TD- Maybe Sacrilege should get started on building the ZH Expert Network.... lol
This has been so obvious for years. The HFT computer programs even target the little guys. For years, from what is suppose to be a real time trading platform, I have watched the theft.Take an odd lot like 141 shares, or 99 or just 1 and watch what happens. The trade may be $101.50 a share, and you can even see comparable odd lot offers. Put in the bid at market and watch. Once the bid is placed, the sale you targeted is sold at the $101.50, then resold to you at say, $101.57. What a deal! This started big time when the system was converted to decimals from fractions. Thanks SEC, you really fixed the problem!
"....from watchdogs aiming to clean up Wall Street, source tell The Post."
Please tell me that nobody believes this drivel. The only thing "watchdogs" aim at is political positions and they will scapegoat anyone and everyone to get there.
I'm not saying that GS isn't ripping everyone off - it is. But, it also will remain untouched. This will be used as a pretext to eliminate GS' competition.
Not one single market maker today can trade without algos. The SEC just instituted new rules for market makers that make it completely impossible to trade without them. So, we're all HFT shops now. What supporters of this kind of action are really supporting is the use of government monopoly on violent force to knock out the little remaining competition to protected Too Big To Fails.
Once again, the focus is on the scapegoats rather than the real problem - the fact that regulators so screwed up the market structure that it no longer works and it's answer to fixing that is to screw up the market even more by going in and randomly killing off firms for political points.
Counting cards in Las Vegas is Illegal. Yet, the Computers can count the amout of Short Trades, the amount of Long Trades, Selling Trades and then trade against the majority. A floor trader would not be able to do this. This also gives the Computers an advantage over individual Traders.
So what? Haven't you ever heard of "comparitive advantage"?
Gaining advantage is the hallmark of competition.
"targeting firms that purport to offer individual investors specialty trading techniques employed by Wall Street powerhouses like Goldman Sachs"
How funny and expected. Going after the individual and not the bank doing the same thing on a macro scale. More like, the cops protecting the PM's from their competition.