Themis Trading On The SEC's Flash Crash (Non) Report

Tyler Durden's picture

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camaro68ss's picture

The Committee recommends The bernanke is a tool!

Mr. Poon's picture

The Commission report was (very obviously) rushed, and was compromised by an interest in finding a culpible party.  Both very serious mistakes; these sorts of studies are best carried out within timeframes that allow for in depth analysis, and without prejudice toward finding culpible parties (as it frequently happens that such incidents are the result of collective incompetence on the part of a large number of parties rather than the efforts of a single malicious party).

That said, the simplest suggestion for stabilizing the markets would be to assess a fixed fee for every order placed, whether or not the order is filled.  That alone would eliminate a tremendous amount of the toxic volatility floating around in the markets.

The consolidated audit trail would also be nice, however; I would dearly love to have access to such a thing in some of the work I do . . .

youngandhealthy's picture

Agree Mr Poon. That has been my take since 7th of May besides go for open pit trading only.

redpill's picture

The Axis of Evil Scapegoats:

1. Snow

2. China

3. Waddell & Reed

NOTW777's picture

waddell & reed???? what happened

MarketTruth's picture

Don't look at me, i went long Frozen Orange Juice Concntrait due to, -XaX rXepXoXrXtX- a hunch i got a day before the official release ;)

Lionhead's picture

Their report is no longer relevant in the zombie US stock market. It died on the day of the flash crash. The daily levitations & manipulations lead no rational investor with any basis to invest in it other than the obvious ponzi scheme that is the US. They run the risk of being trapped inside the scheme as no one is allowed to sell or the market is simply shut down. With the government in control, they can change the rules to suit the situation or the sellers can face recriminations of the governments device.

The banking cartel controls the US gov't, the gov't runs the stock, bond & commodity markets & that is the sad reality of the "free & fair markets" & economic state the US is in.

Caviar Emptor's picture

Also missing from report is any attempt to answer: "what caused the flash crash?". 

The whole report is an attempt to bury the one true fact: the market went bidless. Nothing technical about that. 

What that says however is that what you see as "the market" for any given equity at any moment is phony. Bids are mostly algorithmic ghosts programmed to disappear as soon as sell orders get flashed to them prior to being crossed. Market structure as it exists failed the "stress test" of a real geopolitical turmoil. 

ThirdCoastSurfer's picture

With permission:

"(Orders) are mostly algorithmic ghosts programmed to disappear as soon as (a desired result) get flashed to them prior to being crossed." Retail traders and other weak hands are easily distinguished by the exchanges they are limited to for market submission, but not execution!

Caviar Emptor's picture

But that's insufficient to compensate a large sell wave. It's the whole reason why the original markets were setup with specialists and market makers: to provide liquidity in bidless situations (which happens often). In the flash crash, it was nearly the whole market that went bidless. In the report one of the recommendations that tells it all is the suggestion that market makers up the ante and provide More liquidity. Clearly that mechanism failed under HFT. No surprise. They ain't stupid. 

Matxeu's picture

A nice day for some regulatory capture, anyone.

RobotTrader's picture

USO just had a flash crash about an hour ago....

Caviar Emptor's picture

Yeah. So did front month. Can you spell manipulation? :-)

NOTW777's picture

maybe AAPL next