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Schizophrenic NASDAQ Voluntarily Eliminates Its Own Flash Orders
The Nasdaq, which recently was quite vocal in its condemntation of Flash orders, yet forgot it offers Flash orders itself, has taken matters into its own noble hands (and luckily out of those of the SEC's chairwoman). From a just issued press release:
NASDAQ OMX to Voluntarily Eliminate Flash Order Offering
NEW YORK, Aug. 6, 2009 (GLOBE NEWSWIRE) -- The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today announced that it will voluntarily cease offering flash order types, effective September 1st, 2009.
We appreciate that Chairman Schapiro and the Commissioners will assume overall leadership for the industry to conduct a comprehensive review of all issues related to flash orders. We recognize the SEC's rulemaking process will take time, yet as an exchange we have the ability to move on our own. We respectfully call on other markets offering similar functionality to make the same decision.
In (lack of) other news, Goldman Sachs has still not voluntarily ceased pitching its Sigma X dark pool to clients.
hat tip Nic
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was just meant to post that ... nice job TD ... you should congratulate yourself with a 5000$ whore and a bowl of blow, and put it on my tab ...
That's what you call the "Eliot Spitzer Experience"
ditto
I hear Disney are working on commercializing this on a large scale.
it sure beats the hell out of Jonas Brother and that girl Cyrus .. id watch that
I'd take Disney's Vanessa Hudgens, appears she keeps giving it out for free....
No, no, no... that is the "Eliot Spitzer Breakfast".
Impressive TD... your voice was heard above the noise...
Limited Hangout.
Definition.
"A limited hangout is a form of deception, misdirection, or coverup often associated with intelligence agencies involving a release or "mea culpa" type of confession of only part of a set of previously hidden sensitive information, that establishes credibility for the one releasing the information who by the very act of confession appears to be "coming clean" and acting with integrity; but in actuality by withholding key facts is protecting a deeper crime and those who could be exposed if the whole truth came out. In effect, if an array of offenses or misdeeds is suspected, this confession admits to a lesser offense while covering up the greater ones."
http://en.wikipedia.org/wiki/Limited_hangout
That pretty much said what's happening. Come out with a 'mea culpa' so that everyone goes back to thinking there is so much integrity built into the system while the real corruption is prevented from being dug out and displayed to the public.
Thanks for the definition.
I think Madoff is a Limited Hangout also.
why do you think that
I notice everybody sweating about restrictions on HFT, obfuscating the issue, trying to say volume=liquidity, helpful bots butter my toast, etc. Doesn't fly and they know it, something smells.
All of a sudden EVERYBODY wants to talk about Flash. Textbook damage control, by the numbers. Schapiro pulls a Cookie Lady, gives us a cookie.
Seen it once, seen it a hundred times.
I also found this fellow anon's post pretty interesting, Cheek.
"For any of the grownups left in this room, please have a look at Nina Mehta's coverage before choosing the next best step. (http://www.tradersmagazine.com/issues/20_296/-103978-1.html?pg=1) Excerpt below.
The Quote Rule
The SEC is carefully tracking the flash issue. David Shillman, an associate director at the Commission's Division of Trading and Markets, said at the SIFMA conference that flash orders lasting less than 500 milliseconds fall within an exception to the Quote Rule, or Rule 602, in Regulation NMS. The Quote Rule requires all market centers to publicly disseminate their best bids and offers through the securities information processors. The exception is for orders that are immediately executed or canceled.
[IMGCAP(3)]
However, the SEC's thinking on this issue isn't settled and may be re-examined, Shillman said. "It's an open question as to whether the Quote Rule should be modified, whether it is really necessary to have that [exception] in the electronic world," he told the SIFMA crowd.
This is the rule at the heart of the issue
The exception enables the flashing that is described in the MSM (only the chosen can see some bids/offers on some exchanges)
AND
it covers the IOC activities that effectively allow dummy offers to be posted and withdrawn in an effort to discover and execute at the highest limit order price, rather than NBBO.
Shumer's ban would only cover the first (lower impact) instance and do nothing about the second (which is more pernicious and lucrative)
Also, Shumer's issue helps his NY based exchange constituents at the expense of non NY players, while the second has no political benefit to him since it will impact all algo traders equally regardless of their home base. In fact it might be net harmful to his constituents.
The SEC on the other hand needs to resolve both issues with the one rule change, so their irksome response to his preannouncement of their intentions is understandably ambiguous and not necessarily (although possibly) an indication that they won't follow through.
Shumer isn't, and never will be a hero. Delude yourself at your own risk."
http://www.zerohedge.com/article/clarification-charles-schumer-flash-ban
thanks for the link, but i have red that article, and because of it i was asking the Anon guy to explain why he thinks it Limited Hangout ... and also to see if he is only spouting garbage or has a valid point ... and yes it most certainly is Limited Hangout ..
We're very lucky to have you here to monitor the situation, Cheek.
Good lookin out.
The writing is on the wall for these bastards.
This British action is a trial balloon floated by the U.S. government. Britain would NEVER have done this without permission from Washington. I contradicts the entire "green shoots" notion. It shows you that scum like Shiller and Roubini are simply fronts, paid fronts.
The next leg down is WELL under way. Don't have any doubt about it.
A big surprise relative to market expectations: The consensus expectation was for unchanged purchases. … A key uncertainty ahead of this decision was whether the Monetary Policy Committee would place greater emphasis on the (upbeat) UK survey data or the (much more pessimistic) official GDP data. In the past the MPC has argued that surveys are more reliable, in that they predict future revisions to the official data. But it now seems that the MPC is relying much more on the official data. – Goldman Sachs
[D]uring the crisis, the criticism [of policy] was too little too late. Now, with the extension of the quantitative easing program to the point at which it effectively monetizes this year’s record budget deficit, it’s back to too much too late. … So, what is the committee up to? The statement emphasizes the latest – disappointing – growth number and continued concerns about the current and prospective strength of money and credit. There’s nothing wrong with that, though, at other times, it has seemed as if the committee put more weight on other indicators. … The latest decision adds to the committee’s record of surprising markets. — Robert Barrie, Credit Suisse
The Monetary Policy Committee’s decision to extend its Quantitative Easing program by £50 billion to £175 billion indicates that the committee continues to have serious concerns about long-term growth prospects and persistent muted bank lending to businesses. This is reinforced by the fact that the Bank of England had to seek permission from the Chancellor to extend the Quantitative Easing program beyond £150 billion. Despite the recent improved data, the economy continues to face serious headwinds and sustainable recovery is still very far from certain. – Howard Archer, IHS Global Insight
[The BOE statement] acknowledged that surveys are picking up and the world economy is stabilizing. However, this is in the context of a lower starting point - i.e. the recession is deeper than previously thought. It explicitly highlighted that the future policy outlook will be a trade-off between two opposing forces. Firstly, there is a lot of stimulus already in the system and that will continue to work through. But the economy is still facing the overhang of balance sheets that are in need of repair. — Alan Clarke, BNP Paribas
*applauds*
Time to meet Mizz Blankfein. Shades of a new reality show?
http://www.nypost.com/seven/08052009/gossip/pagesix/goldman_sachs_wives_...
TD,
Excellent work. One step closer to getting Trust back.
Keep splicing these "porn clips" (like in Fight Club scene) into their Disney movie (the one they all want us to see and believe).
LIAR - Rep. Steny Hoyer (Dem.) shouted down in Utica
http://tinyurl.com/n95nsl
That fat boy is really pissed off.
Haaaaaaaaaaaaa
Were the good citizens there using their blackberries to email this to flag@wreckovery.gov ?
i dont know about them but i sure reported ZH for allowing this to be posted to flag@whorehouse.gov
Cheeky bastard, The Joker was an Anarchist at heart. How well does that picture mix with the seemingly-Socialist Obama who wants to create order and increase government? The last thing the Joker wants is order and structure in the form of government. Just sayin'.
hey, its not like i created that pic, its all over the net .. it just seemed suitable to have it as an avatar
This is great news but why wait until September 1st? Oh, thats right, frontrunning revenues need to continue until the end of Q3. :-)
Every day seeing the cards being dealt is a good day...Mikey seems to be buying that trial balloon..yippee!! They should send in the zebras and charge 'em for being "offsides"..like $1,000 a trade..That's the religion they're avoiding.
Flash orders only represent 4% of market volume. By the way, read below to see how they actually benefit retail investors.
"Christopher Nagy, managing director for order routing, sales and strategy at TD Ameritrade, said his firm's experience with Direct Edge's flash orders has been positive. Ameritrade began using Direct Edge's ELP program when it started in 2006. "We saw that clients were getting great executions on limit orders, and a more consistent execution experience, so we continued utilizing the program," he said.
For investors, Nagy continued, flash orders avoid slippage concerns associated with displayed orders. "Reg NMS doesn't incentivize retail or institutional orders to display their hands for fear of slippage," he said. "If you can enter a transparent environment but essentially be hidden, you're more apt to transact in that world." He added that Ameritrade usually receives better prices than the NBBO on Direct Edge."
and from 4 days ago...
"Christopher Nagy, head of order routing, sales and strategy at the retail brokerage giant, noted that although "seeds of doubt have been cast in retail minds," TD Ameritrade sees clear benefits from using flash orders. "We view our obligation to protect clients by getting them the best possible prices in the market very, very seriously," he said. "We have seen and continue to see excellent results for our clients using flash orders.""
I’m leery. I think they just need some more kindling for their next bon fire.
BATS withdraws flash orders. Chuck the Schmuck Schumer teams up with Sheriff Mary Schapiro to restore order on the Wall Street frontier. Firewater for everyone !
SIGMA X is GOOD for clients. There's nothing unfair about a private liquidity pool. I guess the market-makers and specialists lose their B/A spread, but there's no god-given right to it. SIGMA X allows for better executions to both sides of the trade, limits information leakage, protects orders from predatory algos and is good for clients and good for markets.
END.
If it's good for clients why would GS offer it?
No one forces GS clients to participate in SIGMA X. They use it because they see a benefit and will have facts to back up why it is a benefit, unlike most people on this site that just assume that because it is run by GS it must be evil.
I would like to see what internal controls are enforced to ensure that evil doings can't be done.
If you are a client I am sure you can get a better understanding of how it works. Whether you believe what they say is up to you, I can take a guess where you might lean on that one. If you are wary of it, don't use it. Simple as that. Much more informed people (than you and I) are willing to engage in Sigma X.
I admit that my knowledge about this is limited. It appears to me that facilities like Sigma X function as a Shadow Exchange somewhat independent from conventional exchange standards. I expect that these innovative systems have their pros and cons.
With the spectacular failure of the Shadow Banking System, I am skeptical of facilities operating outside of conventional standards.
Yes. The information leakage is limited to Goldman. Excellent point ! Yes again. Private liquidity pools are great because they help CONTRIBUTE to the mispricing of the market by... keeping liquidity private and non-displayed. That is always good for the market. Spectacular case you are making.
These systems were designed for moronic buyside idiots like yourself. Hey boss... I'm one mil ahead of the VWAP... do you want mustard on that ? You are a clown ,a private, non-displayed clown .
BATS is stopping their flash as well. BATS originally called for a coordinated industry canceling of flashed trades.
http://www.batstrading.com/resources/press_releases/BATSExchangetoCeaseO...
See, the exchanges can police themselves. No need to ask any more questions or hold those silly hearings.
This is like walking into your kitchen at night, turning on the light, and seeing the CEO of NASDAQ in a full suit standing on your chair reaching into your cupboard with his hand in your cookie jar. Upon T.D. seeing him there, he issues this statement: