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SEC Uses HFT Firm-Designed Tool To Find That HFT Doesn't Cause Flash Crashes
Just when one thought the SEC has hit rock bottom in stupidity, corruption and porn-addiction terms, to paraphrase the beloved Dennis Gartman, it whips out a shovel and starts digging.
Today's case in point: a report by the agency that Mary Schapiro made into Wall Street's punching bag (and whose legacy her Morgan Stanley-friendly replacement is set to perpetuate) according to which "unexplained rapid price drops in single stocks have generally been triggered by human error, not nefarious trading activity or high-speed trading algorithms gone wild, an official at the U.S. Securities and Exchange Commission said on Tuesday."
Not HFT-driven flash crashes you say? Reuters reports:
"What we are seeing is the result of sloppiness, combined with a lack of checks and balances," Greg Berman [formerly of RiskMetrics] said at a Securities Industry and Financial Markets Association conference. "In this day and age, there should be no excuse for these types of mistakes, especially considering the significant negative impact that these events have on investor confidence."
Most rapid price spikes are caused by old fashioned human mistakes, such as "fat finger" errors, where a trader may accidentally add an extra zero to an order, or by portfolio managers accidentally requesting a large order be immediately executed rather than meted out in a managed flow, Berman said.
"Contrary to public speculation, these types of events do not seem to triggered by proprietary high-speed algorithms, by robots gone wild, or by excessive order cancellations."
Oh, so like Waddell and Reed was to blame for the flash crash, not the fact that some 70% of the tape is filled with empty quotes in which one algo tries to outsmart another algo, and instead of trading blast hollow bids and asks just to game the NBBO?
But just how did the SEC come up with this startling conclusion which flies in the fact of all the factual evidence we have presented over the past 3 years?
Berman heads up a new initiative at the SEC that analyzes market data using a platform launched in January called Market Information Data Analytics System, or MIDAS, which was developed by Red Bank, New Jersey-based automated trading firm Tradeworx.
MIDAS gives the SEC access to all orders posted on the national exchanges, including modifications, cancellations and trade executions of those orders, as well as all off-exchange executions, putting the regulator on even footing with the most sophisticated high-speed trading firms.
Traditionally when a problem in the market has needed to be investigated, the SEC has gone to the exchanges, the Financial Industry Regulatory Authority, and the firm that introduced the error, to diagnose the cause. But MIDAS allows the regulator to do its own assessment as well.
And once again, the conclusion:
The SEC has found that high-frequency trading tactics have not caused or amplified the mini flash crashes it has examined, Berman said.
This is Tradeworx:
So, to summarize, the SEC which admits it was clueless in analyzing the modern, fragmented market (yet which found definitively that the culprit for the May 2010 flash crash was Waddell and Reed, and nobody else, using what technology at the time, nobody knows), uses a platform developed by High Frequency Trading firm Tradeworx... to reach a conclusion that High Frequency Trading firms are innocent of every flash crash resulting from an HFT algo gone haywire...
That sound, dear reader, is your head just going splat.

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Two words: Regulatory. Capture.
"SEC Uses HFT Firm-Designed Tool To Find That HFT Doesn't Cause Flash Crashes."
This is almost as stupid as trusting the people that are spying on you, when they say they are protecting you!
Counting cards is disallowed in the casino.
Science, Truth, and double blind studies not Welcome!
Scanners, bitchez!
"The SEC has found that high-frequency trading tactics have not caused or amplified the mini flash crashes it has examined, Berman said."
Perhaps we should give this Burman fellow the benefit of the doubt... he seems awfully smart and has an impecable CV just like Rubin and Summers... and it's not very bloody likely that this report was done on the cheap either... it wouldn't surprise me in the least if it cost tens of millions...
Just sayin'...
Shorter SEC: "We looked at how we monitor this thing, and we monitor it fine. The tin-foil-hat peanut gallery can just shut the fuck up now."
Consider the fuck up shutted... <(NSA approved comment)
Gartman, Shapiro, Berman, I don't trust a one of them.
Flacon, I'll Waxman to that group too.
They're much better at porn.
i think is how it actually works... ray liotta will explain
http://www.youtube.com/watch?v=4Ktm7IGr0fM
That IS the way it works...
... and for or their next act, the SEC will use an 'adult entertainment industry' designed tool to determine that watching online porn in the office does not negatively impact employee job performance....
http://www.youtube.com/watch?v=LekUKeFijxc
An ancillary finding of the study, while not its main objective but nonetheless felt to be important by those participating was the finding that midget tranny porn was not considered to be the least bit perverted, degenerate, twisted, demeaning, abnormal or aberrant. Several however, did refer to it as "kinda fucked up"
i've been saving this forever, but always held back from sharing thinking that someone at the sec was actually trying to get some work done. sorry. it's too late. but maybe it will crash their servers.
http://xhamster.com/movies/1194961/shemale_midget_fucks_girl.html
Actually it is allowed. But not by you.
Is that Henry Waxman in the animation? His nostrils gives him away.
Waxman is a Disney cartoon. Do not be fooled.
Or you could say puppet.
"Two words: Regulatory. Capture."
One more : criminal.
“I’ve abandoned free market principles to save the free market system.” – President George W Bush
Did the firm also find that real price discovery happens in nanoseconds?
and they also found out that drones don't kill people....
violating every democratic law by killing privacy is good because they where able to locate a lost puppy thanks to all that wire tapping...
and people don't matter if they have less than a billion on their checking account...
one day bernanke will prove how the sun rotates around earth ...
that's a pretty dangerous hypothesis you're claiming here... I've seen woman being burnt at the stake for less...
It's actually a teensie weensie slightly eliptical orbit as it circles the earth... cuz as all bankers( & ZH'ers) know... the centre of the universe goes by the name of The Federal Reserve...
looool dat gif XD
wtf is that?
http://www.imdb.com/title/tt0081455/?ref_=fn_al_tt_1
Film, called Scanners.
And a great film it was.
nice
Scanners .
Just more handouts for Team Wall Street.
hahaha...."The Kids in the Hall" are crushing his head
Im pinching your face!
We need more Snowden type high school dropouts to run this fucking corrupt clown show...As the days pass I'm running out of fucking words to decribe it all.
We'll have to start inventing new words to describe how beyond-fucked-up it has become.
I nominate:
squank (n) - an utterance, or the one who originates the utterings or mutterings, that are both squawking and from a wanker or ought to be associated with a total wanker.
This handy noun can also be compounded with other nouns posing as adjectives, e.g., fraudsquank. "Dick Cheney accused SNOWDEN of being a traitor! Now that's a fraudsquank if I ever heard one"
derived adjective and antonym to swanky: squanky. "My this place is extra squanky" (filled with squanking cockmunchers)
compound noun: freudensquank (n): the condition of having tried to play off others as squanks only to show yourself, in fact, to be the squank
Doubleplusgood.
Ker Plunk. just like Chair-Satans Qe {print fest}.
Is 'Digital BlackWater' behind Benji's QEInfinity[?]... facilitating 'NSA's', current balance-sheet?-- via fat-finger 'Clappers' fat-finger hft!?'
'surely this glove doesn't fit the SEC's faux-conterminous escapades of a ubiquitous renegade call'd the... 'Whited Sepulcher'...?'
,... and if so, how can this be[lial]? http://www.atimes.com/atimes/World/WOR-01-180613.html
, follow the money ... "The making of a global security state" {*[? for richness or in poverty? i wed thee!!! } by Tom Engelhardt 6/18/13 www.atimes.com/
thankyou Tyler
Ps. all is relative in a Einstein world...
Best animated GIF perhaps ever.
We need more of these and less of bAnZaI.
The Gif is great. Your comment, however, sucks. I got much love for WB7.
Billy-7 is the "epitome of TRUTH". That man satirizes' evil like no other.
That comment will see nothing but blood red...
+1 for Billy Banzai.
Bay of Pigs Kicks ass! teaching you how to trade? Homework time/
Eff off. Banzai is the man.
Ahhh Free-Markets at work.
Next, we'll hear that the FDA has just received their report from the Coca Cola Co. stating that HFCS has nothing to do with diabetes.
human mistakes, such as "fat finger" errors
"Sleepy finger" is the new "fat finger." Get with it, SECCCCCCCCCCCCCCCCCCCCCCCCC.
That's fucking gross!!!!!!!!!!!!!!!!
Hmmm... The term crooks and liars, for some reason keeps showing up in my mind
Should only happen for real to these assclown corrupt MoFos that have been allowed to continue this shitstorm and markets...
I FEEL LIKE I'M TAKING CRAZY PILLS!!!
Absurd. Selling of stocks happens because other traders have been selling. Buying because others are buying. It's called trend. These HFT's are programed by traders with the same considerations. If the price moves a certain way it triggers stop losses or sell orders. If the SEC really believes what they wrote then they should get rid of the circuit breakers on the markets....
You're absurd.
These machines are designed to trade up and down to create volatility & churn, to get fee rebates on the # of trades per SECOND which no human can do, and to trigger orders to CANCEL that are not from HFT's which is ILLEGAL.
Then we should have flat markets in a tight range.
no, we should have volatile markets switching from tight ranges to sharp spikes. Like variable-rate dosing to test addictiveness or effectiveness of drugs on animals, you test the market's ability (humans) to tolerate the machine parasitic actions by making an approximate (but not precise) frequency of alternations from "flat" to "volatile" and within each regime of "dosing" you extract the maximum number of dollars which is the higher rebate for the higher churn paid by the exchanges to the HFT's for being "market-makers" (win or lose). In addition if they win trades that's extra money but if you lose x on a trade and gain x+0.0001 for the "market-maker bonus" you now have only ONE variable to be concerned with: how many times you can do that (small win) per millisecond (big win).
The dosing regime change is indicated from the concentrated quote-stuffing & conditional-order execution leading to cancellation of triggered trades of non-HFT's. The HFT's can be cancelled out in this way too BUT since they never miss a beat they merely re-introduce new trades the next millisecond and are unaffected.
It's the humans that are affected.
http://youtu.be/HY-03vYYAjA ScannersHFT Scam vs MF Global Scam
http://youtu.be/QD1NeuADd-s
John, we re in HERE. with Bernanke.....
The inmates are running the asylum.
running?
The inmates are building new asylums to their own custom specs with assurances these will be the most efficient, honest & sane asylums known to mankind & annunaki alike.
Next up, The Independent Association Crack Dealers unanimously find that crack cocaine is not addictive.
any bets that Tradeworx got the SEC a hookup for private meetings with the girls of Vivid Video to arrange this project & conclusion?
We need the Crack Dealers. Honest cash flows couldn't be tracked without crack dealers<
General Asshole foiled the education of these twits. Twice, he says.
BECAUSE the FRB of NY is probably the one doing the HFT. Control the Markets Control the MONEY
Could you imagine with the money they have The Systems They Could Build
LOL! The SEC pay Tradeworx 2.5 million a year for the privilege of using MIDAS...that's almost as much as their various porn subscriptions...
wrap-arounds and brown envelopes; there's no depth to how low it goes.
MSM working overtime:
USA Today poll says that 98% of US population thinks that the US should invade Syria and remove Assad.
USA Today poll says that 79% of US population thinks that Ben Bernanke is doing a Great Job and saved the economy
USA Today poll says 68% of US population says Edward Snowden is a "traitor" and NSA surveillance is OK
USA Today poll just released says that 87% of US population believes the SEC's contention that flash crashes and other "trading anomalies" are just human error, not anything untoward or evil in any way.
now to find a statistically sound poll/sample to see if the population really believes this. If so then the govt isn't as dumb as I thought.
Not to mention "Edison", the big algo that's going to predict what all the other algos are doing:
http://www.fakenation.info/please/no-market-for-real-money-edison-hft-and-the-posthuman-stock-exchange
HFT is all based on a desire to have a completely controlled economy, the fantasy on which such mechanical algos are built.
You gotta love the hubris of Tradeworks calling it MIDAS (after the king that made everything he touched turn to gold). LOL.
Well, Toyota convinced everyone that its' cars don't go apeshit, except the ones that got killed.
You think this is outrageous? Wait until next week when they release a report co-authored by Dick Cheney and the NSA titled, “How Ed Snowden and the Chinese Caused Every Flash Crash Since 2007”.
This is nothing Dodd-Frank can't fix. Bring in the lawyers by the truckload.
Wait a minute, what the fuck exactly is Dodd-Frank except maybe a turd in a pissy punch bowl?
So all that Nanex data was just pretty colors?
i just love the exploding head. that is all.
As the fox fleeds the hen house with one in mouth.
Whoa, whoa, whoa....whoa. You're telling me that federal government agencies may actually have been formed to protect the very industries they are meant to police? That the public good rationale is a ruse, a facade? That the good intentions of many employees within these agencies are being used and manipulated into plausible deniability in order to dispel criticism as mere conspiracy theory? That those that would go to work each day enforcing rules are used as a smoke screen to cover the fact that the industries and the paid-for legislators vis-a-vis lobbying firms actually author legislation behind the rules rendering those civil servants impotent? Wacko.
I saw Scanners when I was a kid. It freaked me out. Cold sweat running down my back. Man, what a movie.
Epic Fail
This is the moment, after everything else Obama has done freedomwise, that all of us free marketeers should truly know that the deck is rigged.
MIDAS...
lol?