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Senator Kaufman Rips Into SEC, Demands HFT "Tagging" Data Be Made Available To Media And General Public
Yesterday we observed that the SEC has finally decided to start collecting data on the one segment of the market most misunderstood by the SEC (by their own admissions), that of High Frequency Trading, and we demanded that instead of merely collecting data and throwing it into the shredder, this data has to be released for thorough public analysis and investigation, as the SEC has proven time after time that it is hopelessly inadequate when it comes to matters dealing with simple cognitive processes and determination of cause and effect (we are certain that a few well trained lab rats could do the entire job of the SEC, and have none of the billion dollar taxpayer cost attendant with feeding this bloated monster of disregulation and corruption). Today, Senator Ted Kaufman joins our pleas for full and transparent disclosure of all tagged HFT data. Alas, we are convinced that as long as the market is not allowed a down day by the primary dealers, any push for the SEC to do its job properly will be drowned out in the typical chorus of bullshit that the market is doing oh so well, and look just how much liquidity in Ambac and Citi there is... After all, that is all anybody trades these days.
Kaufman Says High Frequency Data Should Not Sit Unused - SEC should be an active regulator examining high frequency trading
WASHINGTON, DC. — Sen. Ted Kaufman (D-Del.) released the following statement today after the five Securities and Exchange Commissioners voted unanimously to adopt a proposed rule that should help regulators gain a better understanding of the complex and largely-opaque high frequency trading strategies that now dominate the equities markets:
“Today’s vote marks an important step to ensuring the Commission has the data it needs to analyze and understand high frequency trading strategies and detect any market abuses that illegally disadvantage long-term investors. ‘Large trader’ reporting, in conjunction with a consolidated audit trail, which three Commissioners discussed today, will substantially improve surveillance capabilities.
“But requiring broker-dealers to collect the data and the Commission examining it effectively are two different things. I want to learn more from the Commission about when and how they will analyze the ‘large trader’ data. We need active regulators and surveillance, not a passive system that permits data to pile-up in back offices.
“For that reason, I believe random samples of the data should be collected by the Commission and thoroughly analyzed, so that the Commission can say definitively that certain trading patterns – if the requisite element of intent can be shown – constitute illegal manipulation. Moreover, some of this data, in concealed form, should be released to the media and general public – or at least to academics and private analytic firms under ‘hold confidential’ agreements – so that independent analysts can assist the Commission in detecting illegal activity. If this requires new statutory language, I want to know that from the Commission so that I may push for the necessary changes.
“It is time to end the wild west environment in which high frequency trading firms are unbounded by effective surveillance and the possible detection of any manipulative trading strategies. This is a start, but much more needs to be done.”
The proposed rule would, for the first time, require high frequency firms that trade over 2 million shares or $20 million in a calendar day, or 20 million shares or $200 million during any calendar month, to self-identify and obtain a unique identification code. Broker-dealers would then use the ID code to track “large traders” and make the data available to the Commission on a next-day basis. The rule is being considered under the SEC’s existing “large trader” reporting authority.
In a Nov. 20 letter to Chairman Schapiro, Kaufman urged the Commission to move forward with a “large trader” reporting proposal and implement a consolidated audit trail, asserting, “we simply cannot permit high frequency practices to continue unchecked without the ability of regulators to observe and stop manipulation.” In her Dec. 3 response, Chairman Schapiro assured Kaufman that the Commission would soon put forth such a proposal in order to gain “better baseline information about high frequency traders and their trading activity.”
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the SEC:
http://johnfenzel.typepad.com/john_fenzels_blog/images/2007/03/14/the3monkeys.jpg
***** "Senator Kaufman Rips Into SEC, Demands HFT "Tagging" Data Be Made Available To Media And General Public" *****
Never, Ever... Ever Happen!
Algo scheme / Proprietary Trading Secrets, will be the excuse… Protecting the work product.
Which of course will shield the Algo’s pumping and the propping up of the Broader Market.
The Fed would be complicit in helping to falsify data particularly for mass consumption so that public sentiment can and would be maintained, or as Goldman calls it… God’s work.
I would love to see the “Copula” that sold Ben on the broader idea?!
I look at this as being tied into the SC case on whether the Fed has to disclose the trillion $$ winners in the bailout lottery. If the Fed wins that case there is no way this stuff will be made public. We are being conned and swindled.
Whole lotta ripping and grilling goin' on. I don't see anyone behind bars though.
We are working very hard over here at the SEC to protect the investing public. And, as we all know most of the investing 'public' trades at micro-nano seconds...hee hee
http://www.zerohedge.com/forum/goldman-offers-1click-algo-access-front-running-masses-and-made-easy-course
Exactly. Reading hard stuff about 'investing' and such takes away from important things like surfing the web for internet porn. Also, we'd have to restrict our time spent on Fallout 3 deathmatches.
Sadly, Kaufman is a lame duck. He is a threat to the system and will be removed in November.
I would be all for the SEC sub-contracting 'ZH et al' to do their dirty work for them and get to the truth of things. Taxpayer money well spent. They could easily fund the project with a very small fee on the rebates received for providing liquidity.
Perhaps do it on a reward basis. If someone can document and prove an example of fraud or otherwise shady activity, then they would be eligible to receive a reward from the said funds set aside.
You want to cultivate, dare I say encourage... whistle blower's? and fund the truth being brought into the light... out of Corporate profits?
God Bless You! and that beautiful idea... I bet that the Fed and Goldman can not wait to put some monies aside so thhe truth could and / or would come out...
by peterpeteron Thu, 04/15/2010 - 11:22
#302222
Given Tyler's background, that's about as likely as having Henry Bloget help figure out how to reform the analyst community.
From http://nymag.com/guides/money/2009/59457/
peterpeter,
What about Tyler's background do you have a problem with?
************************* "Dan Ivandjiiski, who lives on the Upper East Side, lost his job at Wexford Capital, a Connecticut-based hedge fund run by a former Goldman trader." ************************
*************** "Blogging may seem like an odd career shift for a well-paid hedge-fund analyst, but for Ivandjiiski, it marked something of a return to the family business: His father, Krassimir Ivandjiiski, is a writer and editor at Bulgaria Confidential, a tabloid known for its controversial investigative reporting. In 1996, the elder Ivandjiiski exposed what he said was political corruption and drug trafficking in, of all places, Montana, in a story republished in the U.S. in a shoestring periodical called Free Speech Newspaper. " *************************************************
Seems to fit, the inforamtion offered, the position taken...
Sincerely, JW
P.S. Not to mention that Tyler is not alone... and the information provided comes from how many different sources? Tyler is who and how many? on any given day?
> What about Tyler's background do you have a problem with?
I don't have a problem with it at all, but in the context of someone saying he should do SEC enforcement work, it seems that the salient part you didn't quote from the article referenced is the one where he has been banned from trading due to his own insider trading:
"the founder is a 30-year-old Bulgarian immigrant banned from working in the brokerage business for insider trading."
Bernie Madoff would also make a very good fellow for figuring out where other bodies are buried, but you would not expect him to be offered the position either....
I have watched the Trading by the HFT and the way I think the Manipulate the Market is as follows:
If they want the Stock to go up the intercept all Sell orders by .oo1 cents so that it does not take out the Bids and drive the Stock lower.
Example if there is a bid for $10. and some one Sells the intercept the bid and bid $10.001 so the Bids do not get taken out. They do not intercept the Bids on the upside.
The reverse is true when they want a Stock to go lower they intercept the Buys. So if the Bid Ask spread is $10. to $10.01 the intercept the Buy bids at $10.009 so the Sell bids do not get taken out.
Interesting to watch.
I also wonder why they can trade in 100ths of a penny when the rest of us cannot. If the HFT's can trade in 100ths of a penny then it should be open for everyone.
I also wonder why they can trade in 100ths of a penny when the rest of us cannot. If the HFT's can trade in 100ths of a penny then it should be open for everyone.
http://www.zerohedge.com/forum/goldman-offers-1click-algo-access-front-running-masses-and-made-easy-course
And just how in your view of this is that a profitable trading strategy?
If the trader wanted said stock to rise, presumably they already held a position in it (or else there would be not financial incentive to do as you say).
However, if they already hold a position, and they didn't want to see the bid at $10.00 go away (for whatever reason you believe this benefits them), then a cheaper alternative would be to simply add to the volume bid at $10.00 without further adding to their own position.
Further, since said trader could get a liquidity rebate if their standing order was hit at $10.00 (~25-30 mil), there is a financial incentive to not do as you suggest - unless at the exact moment they "sub-penny" and take the shares at $10.001, there is another market (or one of their own clients) who is willing to take those shares at a higher price.
Suppose the bid of 10$ would be executed - someone is willing to sell at 10$, but the HFT trader frontruns it and bids 10.001$. Then the first named bidder either has to wait for another seller at 10$ or he has to bid 10.01$. At that moment the HFT trader can dump his shares bought at 10.01$ and cashes in 0.099* per share. Multiply by a significant number of shares to make this profitable, or wait for bigger spreads (10.02$ already gives 0.0199$ profit per share). The stock cannot drop (unless the HFT traders wants it) because all sells are front-run by subpenny bids or asks. I believe this can be profitable. And it clearly is stealing.
Is it possible to see subpenny asks or bids in the order book of brokers?
Hehe...Kaufman trying to pull a Schumer: he's playing a hand of political poker. He has no intention of revealing the Fed's "Big Game" for the likes of us to see. He's vaguely aware how deep the rabbit hole goes. He's shaking them down for a few political favors in the future. The old Potomac Two-Step.
HFT MONITORING BUREAU:
http://williambanzai7.blogspot.com/2010/04/sec-to-launch-hft-monitoring-...