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Schumer Is Shocked, Shocked, There Is Quote Stuffing Going On In Here... Asks SEC To Look Into it
And another one wakes up. Better late than never. We wish to remind the Senator that perhaps he should first follow up on why after the SEC "banning" Flash trading, DirectEdge and other exchanges still frontrun orders on a daily basis, and why flash trading continues to lead to, ahem, flash crashes.
From Dow Jones Newswires
U.S. Sen. Charles Schumer urged federal securities regulators to explore ways to slow some high-speed trading at times of market stress and to investigate strategies that have raised concerns of stock manipulation, including one known as “quote stuffing.”
Schumer, a New York Democrat, urged the Securities and Exchange Commission to launch a formal inquiry into whether computer-powered trading firms’ rapid entering and canceling of stock orders, called quote stuffing, played a role in the so-called flash crash of May 6, and to more broadly reconsider these participants’ role in the U.S. marketplace.
“While I acknowledge that technological advances, including [high frequency trading], have brought significant efficiency gains to our markets, I have come to believe that HFT provides less of the benefits to our markets than its adherents claim, and does so at greater cost to long-term investors,” Schumer wrote in a letter to SEC Chairman Mary Schapiro, a draft of which was reviewed by Dow Jones.
SEC representatives were not immediately reached for comment.
The Wall Street Journal reported last week that the SEC has begun looking into whether quote stuffing is putting some investors at a disadvantage by distorting stock prices.
Also under agency scrutiny is a practice known as “sub-penny pricing,” where many orders are priced in increments as small as one-tenth of a cent and far away from the most recent price of a stock, raising fears of manipulation.
The SEC should identify firms that frequently pursue such strategies, Schumer said, and require exchanges and other trading venues to throttle back these firms’ trading activity–or that of all participants–when market volatility is on the rise.
Requiring stock quotes to stand for a set period of time would also help ensure that trading programs can’t send thousands of orders if traders have no intention of executing them, he said.
Such a minimum quote lifetime has been suggested by brokerage executives in recent months, but implementing the idea is seen as difficult. Some traders have said it could create the possibility of arbitrage in related securities or derivatives markets.
The recommendations from Schumer, a senior member of the Senate Banking Committee, follow his call in August for the SEC to create additional requirements for high-speed electronic traders to keep trading in volatile markets. Several such firms which typically provide market liquidity ceased trading amid the May 6 flash cash, potentially exacerbating price swings.
Schumer’s comments come as U.S. regulators prepare to deliver a report as soon as this month on the flash crash, which exposed flaws in the infrastructure of U.S. securities markets and thrust computer-driven trading into the spotlight. European regulators and exchange officials are also expected to discuss the topic this week at a conference in Interlaken, Switzerland.
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" explore ways to slow some high-speed trading at times of market stress "
but pay no attention during times of euphoria ofcourse
Of course. All this regulatory demand because of HFT will end up with the government deciding when it enforces them and when it does not, all because of public interest of course. And you know how this will play up and who will benefit.
I actually like turkey stuffing. My wife has a secret recept for that ;)
Ah yes, Casablanca is one of my all time favorites.
http://www.youtube.com/watch?v=-Gf8NK1WAOc
Schumer who headed up to Washington to
gun down the Lincoln 'derivatives' amendment
in the final days of Fin-Reg horse-trading, doing
a 360 ? Lol
My thought exactly...Senator $%8t for brains is trawling for lobbyist dollars on this subject.
Dear Senator Schumer,
Go pound salt. You are one of the most lavished upon darlings of Wall St., we're not so stupid as to expect you to bite one of the hands that feed you.
Sincerely,
A Western New York Constituent
Per the article.
If by waking up you mean the lizard moves to a sunny spot on the rock to warm it's blood before again feasting upon the zombified population, then yes I agree. Just remember that zombies are very dangerous in large numbers.
Schumer is a wall street whore. Nothing but smoke and mirrors here, nothing at all.
a wall street whore
correction: a two dolla hoe
What's wrong with charging a penny per quote? Fight fire with fire.
Requiring stock quotes to stand for a set period of time would also help ensure that trading programs can’t send thousands of orders if traders have no intention of executing them, he said.
Such a minimum quote lifetime has been suggested by brokerage executives in recent months, but implementing the idea is seen as difficult. Some traders have said it could create the possibility of arbitrage in related securities or derivatives markets.
................................................................
Bingo....ONE SECOND MINIMUM
But in addition what MUST happen ?
Defragmentation
Elimination of derivatives
Banks should only be allowed to SERVICE RETAIL...not GAME RETAIL...
Information ....wiki based format....
No minimum account size 1 to 10:1 margin possible
No short sale rules ....except limits by outstanding shares....by electronic tag
Size limitations....Which market would be better....one serviced by manipulators or one whereby there are 2 billion RETAIL accounts pressing their own buttons....????
Also costs of transactions should be one set rate for all....ie 20 cents per hundred shares/units....
PLAIN VANILLA STOCKS AND BONDS FOLKS.....THAT IS OF COURSE IF YOU WANT/NEED A FAIRER MARKET.....
Thank you for a burst of sanity with respect to market structure. I agree the changes above would make for a much less dysfunctional capital market in the US.
Any political candidates besides Paul, Nader, and Kucinich willing to get behind these?
Gee, "Where's My Check" Chuck didn't even have a committee hearing for the photo op?
Better late than never. You guys early on the hft bandwagon, woke up people to a critical mass that gets picked up by the normal (crap) press, and he can't pretend to ignore the issue anylonger. despite what senator Kaufman has been saying and sending out (LOL).
Grampa Munster is too funny!
The reality is that Wall Street knows that if somebody doesn't think of a way to bring back retail investors (and fast), Wall Street itself is going to be stuck holding the bag again.
And he's calling for (get this) the SEC to ride to the rescue?!
Too funny!
Schumer should be sent out to the pasture.
With all the technology out theer, can someone creaet a FLASH EXECUTION PROGRAM (no, I don't mean a dirty bomb)??? Can somoen create a program that actually executes all those trade that are stuffed in the pipeline with no intention of them being traded??? What would happen if some HFT guy sent all those trades into the system and got buy executions delivered to his account????
I would love to see his face when he got those messages!!!
add: Oh yeah....Schumer sucks!
http://www.youtube.com/watch?v=gtjYrwnRWwM&feature=related
Is it "waking up" or are these fellows finally recognizing some risk of personal danger in not speaking up? I've been reading ZH for 8 months and a recurring theme is one of unchecked criminal level activities rampant in our financial sector. If these allegations are only partly true the metaphorical "carpet of stuffing under" must be laying so high at this point that it may as well be flying.
Is it possible the current rash of "I told you so" is a leading indicator that crimes against the system are becoming impossible to tuck away into their "nothing to see here" wonderland of personal gratification?
Trying to get in front of the parade, eh Chuckie?
The space between Chuck Schumer and a TV camera is the most dangerous place on earth. What a tool.
Market makers no longer make markets. Flash traders do, but don't stand behind their bids when markets get illiquid. While the good ole boys network of market makers occasionally 'stole' from markets, they were required to make markets and they did. Now that spreads have been eliminated (by the $%#@% regulators) there is no one to stand up and make a market. The $!%$ regulators have exchanged lower spreads for higher risk and lower depth. Maybe one of these days the lawyers at the various agencies will take econ 101 and 102.
Schumer's monthly protection money payment must have been late again.
The lady doth protest too much, methinks
I bet the DTCC has absolutely no clue who owns what, when, where, why, or how!
Wow. Gonna be some cheap server space in New York and London soon. HFT f%^#ers going the way of SOES bandits in 3-2-1.
Heh - we should be so lucky. They ain't goin' anywhere.
The casino is rigged and will continue to be.
I would urge ZH readers to consider that any regulation that Chucky Schumer likes is going to be bad for everyone except whoever is bribing him at the moment.
+1
Schumer = Wall Street Tool = Ponzi Politician
This is total knit picking minutia by one of the most corrupt senators on capitol hill.....
If you need to investigate the causes of the "flash crash", you shouldn't be trading and much less, should you be designing regulatory criteria. "Quote stuffing", how bout when someone calls your bluff....? Happens to me all the time, do you hear me whining about it...? And sometimes I'm not bluffing.... Ouch....! that must have hurt like a mother fucking bitch...
What you refer to as the "flash crash" was a one shot deal. Will it happen again....? Yes, just when everyone is certain that it can't....
Best regards,
Econolicious
Oh no. I don't want Schumer on my side of any battle.
Charging a nice tidy cancellation fee ought to take care of the stuffing problem.
When the robots send a million orders down the pike, knowing that nearly all will be canceled, a simple penalty ought to do the trick.
And, if Schumer's for it, I'm agin' it.
Anyone would think there was an election looming.
DOW/S&P500/FTSE/EURO short signal continues:
http://stockmarket618.wordpress.com