Senator Kaufman Says Evidence Shows May 6 Flash Crash "No Isolated Event"

Tyler Durden's picture

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Muir's picture

"Regulators should add to their list the need to examine whether the precipitous drop in Diebold stock was the result of high frequency traders who can subscribe directly to market data and news feeds and perhaps had programmed faulty correlations into their algorithms to react to breaking news events."



You gotta be kiddin me!

I've seen evidence of that on my screen ever since I'm on 24+ MB/sec since 08.

This is news?

johngaltfla's picture

It's not news to most of us. It is to sheepledom and the regulators who spend time suckling with the banksters.

Cognitive Dissonance's picture

He just wanted to brag about the size of his :>)

New_Meat's picture

Emulex back in the '90's was a practice run.  - Ned

Joe Shmoe's picture

This is a system in extremis.  The HFTs are starting to infect and affect each other and the very variables they rely on.  

Like my doctor jogging buddy said this morning, when a patient has had all of the intervention that can be given, and all of the medications begin to impact each other and cause a whole mess of unintended results, the only thing left is dramatic intervention, such as surgery.

This won't end well.

living on the edge's picture

One might suggest the crash/crashes are merely a glitch in the matrix. The programs are being written over as we speak.

I placed another order for gold coins today just in case. Time to average up again.

Gloomy's picture



June 16 (Bloomberg) -- Fannie Mae and Freddie Mac, the mortgage firms 80 percent owned by U.S. taxpayers, plunged after regulators told them to delist their common and preferred shares from the New York Stock Exchange.

Muir's picture

 I think it was manufactured locally... finest quality... superior workmanship. There is a maker's serial number... 9-9-0-6-9-4-7-X-B-7-1. Interesting. *Not* fish. *Snake* scale!

4shzl's picture

Very nice.  Ridley Scott's best work.

Wyndtunnel's picture

"Wake up front runners. Time to die!"

carbonmutant's picture

"    It seems you feel our work is not a benefit to the public."

4shzl's picture

we should all agree that such unusual market activity strikes at the very heart of our market’s credibility

I really like Ted Kaufman, but he's fighting a battle in a war that's already lost.  The stock market has no credibility -- none whatsoever.  See the Cramer rant that TD posted yesterday for confrimation.

Rick64's picture

I have become deeply concerned that the credibility of our stock markets – one of our nation’s most precious national treasures – can no longer be taken for granted. 

 I like this one "most precious national treasures" . You would think he was talking about the constitution or something.

bugs_'s picture

They did the mash
They did the monster mash
The monster mash
It was a graveyard smash
They did the mash
It caught on in a flash
They did the mash
They did the monster mash

firstdivision's picture

Why do I feel like this last half-hour I was molested by BigBen and Timmah?

RobotTrader's picture

Wonder how the Hi-Fi Robots handled this today....



Gubbmint Cheese's picture

God Robo.. that gif is killin me

Muir's picture

OOuch (too painful to watch)

Mentioned here some weeks ago about a guy I knew who hadn't paid his mortgage for well over a year but felt rich because he owned 10,000s FNM shares.


Waterfallsparkles's picture

What is a shame is that they KILL all of the penny stocks because that is where Retail Traders are.  I think that FRE, FNM counted for at least 25% of the volume on the NYSE.  On a side note why did they request that the shares be delisted?

The only reason I can think of is that from what I understand that when a Stock is delisted that CDS's will then be paid and due.  Also, that there will be no capital gains on the Short positions when sold.

No reason this Company was Nationalized.  They were at the time still solvent.  Now delisting.  Someone made out BIG on this move.  I think it has something to do with the FIN Reg.  and Banks having to get CDS's out of their Companies.  It is not time for them to take profits, just in case they have to divest themselves of their Derivatives trading division.

New_Meat's picture

the untranslateable word that we all enjoy - Ned

Rick64's picture

Looks like an old PRIDE fight. Randleman vs. Fedor?

I am a Man I am Forty's picture

Yep, and a minute later fedor puts him in a kimora and makes him tap.

Rick64's picture

Yea I remember. I have that one on DVD.

TexDenim's picture

Hi frequency neck snapping.......

Arkadaba's picture

Too rich! Diebold's long-expected settlement with the Securities and Exchange Commission (SEC) over fraudulent accounting practices ....

This is the same Diebold that makes most of the electronic voting systems used in the U.S.

Real Estate Geek's picture

Here's a video from the Feb., 2008 Onion:

Diebold Accidentally Leaks Results of 2008 Election Early

New_Meat's picture

Too late for s/w changes for 2010, but not for 2012.  After all, DoJ squashed the Panthers conviction in Philly for voter intimidation (thanks EriK--doin the Saul work there).

Maybe they can manufacture more voters in the precinct than there are people?

- Ned

stopthenewworldorder's picture

anyone fancy a frontrunning panini?

awells's picture

Such big moves in response to event used to be characteristic of thinly traded markets. I think that the premise that HFT enhances liquidity is questionable, whatever else they do.

Rick64's picture

But with as many as 98 percent of orders placed on Nasdaq cancelled or otherwise unexecuted on a given trading day,

 Seems like a good clue that someone is frontrunning. I think that the lost confidence in the market, is due to the bogus pumpup of the market too.

jkruffin's picture

Gee, how in the world do we fix this?   Let's see,  how about banning HFT.

That would be too simple, now wouldn't it.  We don't have anyone in office, nor anyone in a regulatory agency, that is smart enough to look at how easy it is to prevent.

Waterfallsparkles's picture

He is right. Investor confidence will be obliterated.  He is also right tonight on CNBC where he said that HFT will KILL the Market they are trading in.  When Retail Investors pull their Money out of the Market never to return who does Wall Street have to rape?  Only themselves.  Even with 0% interest rates in the Bank at least you have your principal.

The other thought would be to put really low bids in the Market in hopes for a Flash Crash and hope to get hit.  Somewhere around 50% less than the ask.  But do not sell the same day as they may reverse your trade and you would go from a long to a short.

Waterfallsparkles's picture

Also, as I have said in the past it is a hollow market.  No one places bids below or above the bidding because it will give the HFT computer information on your intentions to buy or sell the stock.  Everyone today trades around the Bid Ask price with no Bids above or below.  It becomes a Hollow market like we saw with the flash crash. Trader conditioning since HFT.

Boilermaker's picture

In other late breaking news, shit still stinks.

Waterfallsparkles's picture

In another note it looks like the Big Boy HFT's are trying to KILL the Little HFT Computers.  They are eating themselves.  If your are not a Big Boy HFT you can get killed.  Retail are gone.  They have to eat themselves.

virgule's picture

There is another way.

I don't think fudging trading rules to outsmart smart traders is ever going to make markets better / safer. It's just going to make a dangerous market appear to be safe - but it won't change anything about hidden/unknown risks.

Instead, sticking to plain old fashioned trading would overcome all HFT problems AND give regular traders small opportunities for payback from HFT:

- take a position in the stocks you believe in

- don't use any leverage

- no margin calls during massive HFT drops (works on rises too, if your position is short but not naked short ;-)

- plenty of reserve capital to buy at huge discount

It's the greed of leveraging that is killing victims of HFT - not HFT itself.

TexDenim's picture

Why does high volatility automatically equal lack of market credibility?

StychoKiller's picture

"In the aftermath of May 6th, the integrity of our markets has been questioned, and investor confidence has been shaken."

Shaken, stirred and frapped!  Sorry, but I'm NOT gonna buy into this mess again.

Like so many knowledgeable people have said before (Peter Lynch, for example): "Don't buy into a business you don't understand."

Grand Supercycle's picture


EURO bullish warnings mentioned earlier, have strengthened today. Vice versa for the USD index of course.

I have detected EURO buying support for several weeks now.

XAUEUR daily chart gives bearish warnings as of today.

This could be an important development.

The proprietary indicators I use in my technical analysis can identify trend changes before they occur.