This page has been archived and commenting is disabled.

Double Whammy Shocker From Goldman Which Is Also Waving Goodbye To The NYSE

Tyler Durden's picture




 

Long-time readers may recall that in the early days of this website, in addition to HFT, one of our market structure pet peeves was the fact that Goldman Sachs was a Designated Market Maker on the NYSE, reaping various benefits primarily as a result of the firm's role as of one of the only Supplementary Liquidity Providers at the stock exchange - a form of slower HFT "liquidity provider" if you will. Over time, as HFT became all encompassing and as increasingly more trade took place in the HFT domain, Goldman's DMM role became less prominent especially with the arrival of such program traders as Latour Trading.

Why do we bring this up?

Because in what is a true double whammy of market structure stunners from Goldman over the past week, not only has the firm done an about face on HFT (we eagerly await Goldman's pardon of "HFT market manipulator" and former Goldman employee Sergey Aleynikov) and is now actively bashing the high freaks (much to the chagrin of Virtu and its pulled IPO, whose lead underwriter Goldman just happened to be), overnight it was reported that Goldman is also in the process of selling its "designated market-maker" unit to Dutch firm IMC Financial Markets to sell the trading business.

Keep in mind that Goldman bought its presence on the NYSE as part of its 2000 acquisition of Spear Leeds & Kellogg, which it bought for $6.5 billion at the time. Incidentally, we had a few things to say about Goldman's improprieties in this regard too. Recall from our July 2009 article, "Is Goldman Legally Frontrunning Its Clients?":

Everyone who is anyone on Wall Street has at some point used the Goldman 360 portal whether for research, news, keeping a track of prime brokerage portfolio or, disturbingly, for trading, via the REDI Plus 9.0 platform (now loaded with enhanced algo trading features to make life for you, dear soon to be frontran Goldman client, so much easier). A second widely accepted Wall Street concept is that a disclaimer is the last thing that anyone reads, if ever. Yet after taking a close look at the Goldman disclaimer for the 360 portal, which is an umbrella waiver or all downstream websites, including REDI, one discovers the following gem:

 

Monitoring by GS: Your use of the products and services on this Web site may be monitored by GS, and that the resultant information may be used by GS for its internal business purposes or in accordance with the rules of any applicable
regulatory or self-regulatory organization.

 

One second: by using Goldman 360 a client voluntarily allows Goldman to provide keystroke by keystroke data of everything the client does, even if that includes launching trades via REDI, to Goldman for the internal business purposes. The third thing everyone on Wall Street agrees on is that "internal business purposes" usually (and in Goldman's case, almost exclusively) means proprietary trading.

 

Are Goldman 360 clients (in)voluntarily signing off a release to be front ran by Goldman on any portal-based trade? Could Goldman please clarify just what "internal business purposes" means in the context of this overarching disclaimer, and also whether Goldman has ever actually used 360 submitted information in the decision making process of its prop trading desk? Lucas Van Pragg: the floor is yours.

And here are some additional Goldman Sachs and Spear, Leeds and Kellogg form documents that contain an even more crypitc warning in section 4(f) in Use Of Services:

 

You acknowledge that we may monitor your use of the Services for our own purposes (and not for your benefit). We may use the resulting information for internal business purposes or in accordance with the rules of any applicable regulatory or self-regulatory body and in compliance with applicable law and regulation.

 

NOT FOR YOUR BENEFIT? I mean, come on, how more clearer does it need to get.

Anyway, back to the topic at hand and Goldman's disposition of NYSE assets: according to the NYT, Goldman is seeking a paltry $30 million for the DMM post. In other words, a total loss on $6.5 billion in old school assets courtesy of HFT.

Not unexpected.

However, what is unexpected, is the complete transformation Goldman has undergone in in the past several weeks: first Goldman, the bank that everyone else on Wall Street always imitates, waving goodbye to HFT, and now departing the NYSE? 

When the world's most intelligent FDIC-backed hedge fund, pardon, bank says the current market structure is no longer necessary to Goldman, people notice, and promptly imitate.

To be sure - if this is not indicative of a major storm coming for traditional "lit" market structure (as opposed to dark pools of which IEX, until recently, was one and where Goldman has nearly complete dominance with Sigma X), we don't know what is.

Once again: if we were HFT vacuum tubes, we would be sweating nanobullets right about now.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 04/02/2014 - 11:02 | 4617322 BTCTalks
BTCTalks's picture

They're smart guys (albeit theives). Getting out of the way for a reason... Be long term greedy.

Wed, 04/02/2014 - 11:07 | 4617342 Two-bits
Two-bits's picture

God said to get out from under the safe being lifted above the NYSE.  Lloyd dutifly responds.  

Wed, 04/02/2014 - 11:23 | 4617392 Troll Magnet
Troll Magnet's picture

Has Lloyd been suicided yet? Or is he one of the ones suiciding others?

Wed, 04/02/2014 - 11:26 | 4617409 Say What Again
Say What Again's picture

Speaking of BATS -

What would happen if, for a given stock, everyone started placing bids (or offers) and then deleted them on BATS. What would this do to the HFT algos operating on BATS?  Would they think someone was really trying to buy (sell) that stock, when in fact, they were just goofing.

Wed, 04/02/2014 - 11:35 | 4617441 NotApplicable
NotApplicable's picture

Humans have no capacity to delete orders before an HFT algo had their way with them. Even if you automated it, you're still no where close to being in the same league as co-located servers.

Wed, 04/02/2014 - 12:15 | 4617570 Say What Again
Say What Again's picture

I think you might be missing the point.

If I place a BID, the HFT will raise the BID in front of me.  In fact they raise it by 0.001 (that's a fraction of a penny) or less.  I know this because, like Mr. Katsuyama, I have watched this happen on my own trading platform for the last 5 years. (The only way to really BUY something these days is to hit the ASK.  The only way to really SELL something is to hit the BID.)

So, I don't have to be faster than the HFTs.  I place a bid, and they magically place a bid higher than mine at the same time. But if everyone does this, the HFTs would not know if someone was really trying to buy or not.

Wed, 04/02/2014 - 12:46 | 4617680 percyklein
percyklein's picture

Can't do subpennies on IEX, can you?

Wed, 04/02/2014 - 14:50 | 4618196 Say What Again
Say What Again's picture

I don't see why not. 

But the only reason to use sub-pennies is to front run, so its rendered useless on IEX.  I currently do not have access to IEX, but I hope to do so soon.

Tue, 04/08/2014 - 18:14 | 4637170 MeelionDollerBogus
MeelionDollerBogus's picture

Correct. I've done this myself & tested the price-move vs price-difference on time-scales. I estimate how far off the current bid I can be before it actually is going to move to fill and I move farther, much farther.
I just keep moving it to see how quickly they respond & how far the move is. I think that actually helps illuminate for us humans what else is sitting in the market because we can see what the HFT's are willing to do or not do at that moment.

Wed, 04/02/2014 - 11:13 | 4617363 shanearthur
shanearthur's picture

I imagine a scene where the Roadrunner stops running unexpectedly. Naturally, the Coyote thinks he has a shot at him now. He simply doesn't see the ACME anvil falling from above, but the Roadrunner is ever knowing.

Wed, 04/02/2014 - 13:30 | 4617836 ParkAveFlasher
ParkAveFlasher's picture

The tension keeps building, doesn't it?  I hope it lasts longer.

Tue, 04/08/2014 - 18:13 | 4637168 MeelionDollerBogus
MeelionDollerBogus's picture

Only problem is the anvil is the Fed & the Coyote is the 'market'.
It's time to play the music
It's time to pay the bribes
It's time to front-run the Muppets on the Muppet Market tonight.

It's time to put on makeup
It's time to dress up right
It's time to drop the curtain on the Muppet Trades tonight.

Wed, 04/02/2014 - 11:03 | 4617325 Dr. Richard Head
Dr. Richard Head's picture

Bring on the equity market crash.....how will treasuries fair in such an environment? 

Wed, 04/02/2014 - 11:17 | 4617379 asteroids
asteroids's picture

Would you want to be a market maker if you knew the markets where shit and a crash was ineviitable? GS is a survivor.

Wed, 04/02/2014 - 11:31 | 4617425 Dr. Richard Head
Dr. Richard Head's picture

GS would simply have the type of company they are considered changed post ipso facto.  They are the government.

Wed, 04/02/2014 - 12:52 | 4617708 BurningFuld
Wed, 04/02/2014 - 11:03 | 4617327 Doubleguns
Doubleguns's picture

The muppet strings come into focus now.

Wed, 04/02/2014 - 11:04 | 4617328 newsguy68
newsguy68's picture

Fingerprints For Food: Rationing Hits Venezuela As Country Rolls Out Grocery ID Cards

 

 

http://survivalbackpack.us/fingerprints-for-food-rationing-hits-venezuel...

Wed, 04/02/2014 - 11:04 | 4617329 Dr. Engali
Dr. Engali's picture

Batten down the hatches, we are in for a stormy ride. It's looking like .gov is rolling out those MyRas just in time.

Wed, 04/02/2014 - 11:04 | 4617331 RaceToTheBottom
RaceToTheBottom's picture

Anyone know if HFT skimming loses are tax deductable?

Should we expect GS to file 10 years of amended returns with billions of losses due to HFT?

Wed, 04/02/2014 - 11:17 | 4617376 NoDebt
NoDebt's picture

Yes, they are.  And thanks.  You just ruined my day.

Wed, 04/02/2014 - 11:28 | 4617417 RaceToTheBottom
RaceToTheBottom's picture

At the risk of going all "If the tree falls in the forest and no-one is there to hear it..." on you, your day was already ruined, you now just realized it....

 

The SQUID does NOTHING without a purpose.  It did this cost benefit calculation a long time ago...

Wed, 04/02/2014 - 11:05 | 4617332 piceridu
piceridu's picture

Just what do they have up their collective sleeves? Inquiring minds want to know...

Wed, 04/02/2014 - 11:05 | 4617335 SilverIsKing
SilverIsKing's picture

Brad Katsuyama is now in bed with GS so perhaps he should be sweating bullets.

Wed, 04/02/2014 - 11:08 | 4617347 Dr. Engali
Dr. Engali's picture

Perhaps they were in bed all along. Nothing financial sees the light of day without the squid's fingerprints all over it.

Wed, 04/02/2014 - 11:13 | 4617366 BandGap
BandGap's picture

This all looks contrived and far too coincidental, including JPM farting in the Russian's elevator.

Something is up.

Wed, 04/02/2014 - 11:16 | 4617372 Dr. Engali
Dr. Engali's picture

I agree. Events are speeding up now, and we should be seeing some fireworks soon.

Wed, 04/02/2014 - 11:26 | 4617408 Puncher75
Puncher75's picture

Now that's funny

Wed, 04/02/2014 - 11:17 | 4617380 Mediocritas
Mediocritas's picture

First mover advantage. IEX's technique is going to become the standard. GS's dark pool is only going to grow as they attract more clients by painting themselves as the good guys, yet nothing changes front-running their own clients out of the pool onto IEX.

Wed, 04/02/2014 - 12:05 | 4617541 ThroxxOfVron
ThroxxOfVron's picture

Exactly.  The IEX 'fairness' umbrella will provide cover for GS dark pool muppet mugging.  Before the orders are routed to IEX they will be dunked in the GS dark pool and front-run by the prop trraders.

..Just like a pair of jean tossed in the ( GS dark pool ) washer give up loose change before being sent over to be fluffed in the ( IEX ) dryer.  

 

Wed, 04/02/2014 - 11:09 | 4617352 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

ha ha ha ha ha ha ha ha ha ha ha ha ha!

Yes, we laughing at you, bitch!

That would be an easier to read, and understand, disclaimer.

Wed, 04/02/2014 - 11:12 | 4617361 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

They know what is coming....

Make money selling drinks on the titanic then make money on selling lifer preservers when it starts sinking.

Wed, 04/02/2014 - 11:19 | 4617387 buzzsaw99
buzzsaw99's picture

only so they can steal the jewelry off the floating corpses

Wed, 04/02/2014 - 11:34 | 4617435 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Absolutely a jackyl would never turn down the opportunity.

You get the passengers drunk and while they are all fucked up and drunk you quietly put together the life preservers and rafts and jump ship before they start sobering up, the hangover kicks in and realize the ship is sinking. Front run the panic to get off the ship that is what they do, front run everything.

Wed, 04/02/2014 - 12:21 | 4617600 Miss Expectations
Miss Expectations's picture

They paid off the band with promises of seats on a life boat.  They needed a 45 minute distraction while they ransacked the staterooms.  Then they apparently stole the violin: http://www.cnn.com/2013/10/19/world/europe/titanic-violin-auction/index.html

Wed, 04/02/2014 - 11:15 | 4617371 buzzsaw99
buzzsaw99's picture

all i know is that it's bonus time for the squid again.

Wed, 04/02/2014 - 11:19 | 4617383 ebworthen
ebworthen's picture

Wonder what their new gig will be?

Surely they have an inside track on some new scam; some way to gin the markets and steal Mom and Pop's savings.

Wed, 04/02/2014 - 13:24 | 4617809 Ignatius
Ignatius's picture

Illicit drugs are a proven profit center.

Wed, 04/02/2014 - 13:41 | 4617885 ParkAveFlasher
ParkAveFlasher's picture

...and the first slide of the Power Point will read, "MEXICO".

Wed, 04/02/2014 - 11:19 | 4617384 Seasmoke
Seasmoke's picture

So God no longer wants to trade on the NYSE ???

Wed, 04/02/2014 - 11:19 | 4617385 Caviar Emptor
Caviar Emptor's picture

As a long time ZHer I want a round of applause for Tyler on the HFT story: I am a living witness to the ravages of HFT having been ripped off while trading on the correct side during the flash crash. Should have rang the register big only to have been forced into a settlement with broker and exchange. I took my complaints to the limit and found what rotting excrement there was in the markets. All smoke in mirrors. Bids and offers were all fake

Well done Tyler!

Wed, 04/02/2014 - 11:29 | 4617421 Skin666
Skin666's picture

Zero Hedge is also approaching 200k users on Twitter.

 

That is pretty impressive for a 'conspiracy theory' tin foil hat paranoid blogger.

 

You are the best Tyler(s)

 

 

Wed, 04/02/2014 - 11:34 | 4617436 El Hosel
El Hosel's picture

... 200,000 down, 300 million to go. Were going to need a bigger server.

Wed, 04/02/2014 - 12:08 | 4617507 Skin666
Skin666's picture

I used to hate Twitter, but now I love it. Not for the cat pictures or the sad cunts that tweet the content of their breakfast every morning, but that in today's vapid, attention deficit twilight zone bizzaro world, every cunt's on twitter.

 

So when ZH pumps out Grade A financial information on twitter, people find it, and are increasingly re-tweeting it. This is how you destroy TPTB. With the TRUTH, and through mockery and sarcasm and the power of social media. And it's working...

 

 

Wed, 04/02/2014 - 12:09 | 4617551 inky
inky's picture

Thank god for the internet

Wed, 04/02/2014 - 12:09 | 4617554 agstacks
agstacks's picture

Yup, for sure.  I had fun lighting up that Psaki bitch last week.  And #AskJPM as well.  +1

Wed, 04/02/2014 - 13:24 | 4617808 Skin666
Skin666's picture

#BernankeBookTitles was my favourite!

 

Zen and the Art of Helicopter Maintenance had me laughing for days

Wed, 04/02/2014 - 11:19 | 4617386 Caviar Emptor
Caviar Emptor's picture

As a long time ZHer I want a round of applause for Tyler on the HFT story: I am a living witness to the ravages of HFT having been ripped off while trading on the correct side during the flash crash. Should have rang the register big only to have been forced into a settlement with broker and exchange. I took my complaints to the limit and found what rotting excrement there was in the markets. All smoke in mirrors. Bids and offers were all fake

Well done Tyler!

Wed, 04/02/2014 - 11:28 | 4617420 The Abstraction...
The Abstraction of Justice's picture

That is the key, both the buyers and the sellers are the same people, and they use HFT to cancel unwanted trades, front-running the trade requests from the chumps.

 

Campaign to sue them is here:

 

https://www.indiegogo.com/projects/silver-manipulation-anti-trust

Wed, 04/02/2014 - 11:21 | 4617389 Dr. Engali
Dr. Engali's picture

Off topic:

Supreme Court strikes down overall limit on campaign giving

 

http://www.washingtontimes.com/news/2014/apr/2/supreme-court-strikes-dow...

 

Now they can go in and buy their senator without any pretense of fairness. 

Wed, 04/02/2014 - 11:31 | 4617429 NotApplicable
NotApplicable's picture

GOOD! I'm sick to death of pretenses.

I much prefer the wolves look like wolves, rather than those sheepish disguises they parade around in.

Not that it will matter, as the sheeple will only demand more government to reign in more government.

Tue, 04/08/2014 - 16:24 | 4636809 MeelionDollerBogus
MeelionDollerBogus's picture

baaahh-baahhh(cough,cough,WOOOF)

nothing to see here...

Wed, 04/02/2014 - 11:36 | 4617446 Buckaroo Banzai
Buckaroo Banzai's picture

The per-candidate limits are still in place, they just made it so you can give the limit to as many candidates as you like.

Another attack on state sovreignty. Now instead of being forced to cherry-pick on a state-by-state basis, you can use your money to influence across all states at once.

Wed, 04/02/2014 - 11:39 | 4617452 Mediocritas
Mediocritas's picture

They should just cut the shit and list themselves [politicians] on the stock exchange, biggest market caps get elected, then they pay regular dividends to their shareholders. That's how it works anyway. I wanna buy me some puts on the guy with the ZERO ticker.

Wed, 04/02/2014 - 11:48 | 4617479 Cthonic
Cthonic's picture

intrade, rip.

Wed, 04/02/2014 - 11:22 | 4617395 nostromo17
nostromo17's picture

Clearly the hassle of being one among many HFT operations  out weighs the benefits when one is among a few such operations ripping everyone off.

And Goldman like J.P. Morgan probably (and others most likely) has an inside line with the government on what is going to happen to HFT if they did not prompt the outcome themselves through their government lobbying people or government contacts.

The inside contacts of large banks vis lobbying and shere insider information (inside the government executive, ligislative and perhaps judicial branches) should be another point of investingation for the FBI. WHile not corporate insider information, privileged government information should come under the scrutiny of insider information law violations.

Aside...who had the contact in the vehicle rear view camera industry to get it made into law that all vehicles must have rearview camera capability in the next couple of year?. A coupe as bigger that all the helmet law requirement and perhaps less reasonable(since helmets do save lives and rear view cameras probably are a lot more expensive for a lot less lives saved).

Also rear view cameras seem to have the flaw that drivers when they adopt them stop looking around behing them to the back corners of the car (which the camera doesn't see) probably causing a lot more fender benders in parking lots than saving tots from being run over by grandparents or careless parents.

 

Wed, 04/02/2014 - 11:41 | 4617457 Ralph Spoilsport
Ralph Spoilsport's picture

"who had the contact in the vehicle rear view camera industry to get it made into law that all vehicles must have rearview camera capability in the next couple of year?"

Jackie Gillan of Advocates for Highway and Auto Safety probably knows. It's estimated to add $135 to the price of new cars. $2 Billion a year to save 15 lives a year.

http://www.saferoads.org/

Cars are being turned into a technological nightmare. The mandatory backup cameras will complicate the dog's breakfast known as CANBUS even more.

Wed, 04/02/2014 - 11:51 | 4617486 laomei
laomei's picture

It's because cameras are cameras and the next move is to get all the cars to join the "internet of things".  For your own benefit of course.  Net-enabled car with all the mirrors swapped for cameras?  What a wonderful way to pry and spy.  Dig deep and you'll find NSA and other alphabet agencies pushing for it.

Wed, 04/02/2014 - 12:50 | 4617698 robertocarlos
robertocarlos's picture

I thought cameras gave a 360 degree view around the car? It beats those shitty backup radar things which can't see shit so the driver backs into the wall or a pole.

Tue, 04/08/2014 - 16:16 | 4636787 MeelionDollerBogus
MeelionDollerBogus's picture

I was under the impression good radar could see that even with no light, even in fog.

Wed, 04/02/2014 - 11:39 | 4617453 Son of Captain Nemo
Son of Captain Nemo's picture

YES but of course!...

GS will announce the signature relationship with IEX group in the "getting it right department" to bring confidence back to the little guys along with Michael Lewis as Lloyd Blankfein new front office mouthpiece.

Rest easy it will all get better from here now!

Wed, 04/02/2014 - 11:43 | 4617463 Notsobadwlad
Notsobadwlad's picture

IMO prepositioning for th 2015 knife-fall.

God's work ... directly or through his adversary.

Wed, 04/02/2014 - 12:20 | 4617593 Save_America1st
Save_America1st's picture

when guillotines start going on sale, that's when the bankers know to pack it in and lay low:

http://blogs.marketwatch.com/themargin/2014/03/27/used-guillotine-for-sale-going-une-fois-going-deux-fois-no-deal/

This was a real one used during the French Revolution...they wanted 82,000 bucks for it.  But these days they can make a whole lotta guillotines for cheap...made in China and will be sold at WalMart which will bring their shitty sales back to record highs!!!  And there's a seemingly endless supply of bankster heads to fill the baskets...except for the ones who are suiciding themselves ahead of time.  Those who suicide first suicide best!  ;-)

Tue, 04/08/2014 - 16:12 | 4636767 MeelionDollerBogus
MeelionDollerBogus's picture

http://www.youtube.com/sokkomb

DIY guillotine IKEA-style

Wed, 04/02/2014 - 12:30 | 4617637 Graabein
Graabein's picture

On another note, the European commission today fined Goldman and a number of power cable producers 301.7 mill euros for fixing the price for high voltage power cables (cartel). Goldman's share of the fine was 37 mill euros. Source: europower.com.

Just another confirmation of Goldman doing its stuff, keep up the good work boys!

Wed, 04/02/2014 - 12:35 | 4617655 ZeroPoint
ZeroPoint's picture

This is collapse preparation, plain and simple.

Wed, 04/02/2014 - 12:40 | 4617666 Tortuga
Tortuga's picture

IMHO, Goldmansucks is doing this so that can destroy evidence, in the name of transition efficiency.

Wed, 04/02/2014 - 12:42 | 4617671 robertocarlos
robertocarlos's picture

If they give back the money, all the money they have, then I'd be willing to spare their lives and only sentence them to 20 years in jail.

Wed, 04/02/2014 - 12:53 | 4617713 Tortuga
Tortuga's picture

I applaud your compassion.

Does it also extend to their families?

Wed, 04/02/2014 - 12:45 | 4617678 waterhorse
waterhorse's picture

"You acknowledge that we may monitor your use of the Services for our own purposes (and not for your benefit). We may use the resulting information for internal business purposes or in accordance with the rules of any applicable regulatory or self-regulatory body and in compliance with applicable law and regulation."

 

Pennywise: Awww... You want it don't you Georgie? Hmm... Of course you do... and there's cotton candy, and rides, and all sorts of surprises down here... and balloons too... All colors.

Pennywise: Do they float?

[Georgie then reaches in for his boat]

Pennywise: [Pennywise's face begins changing from a smile to a frown] Ohh yes... They Float Georgie... They Float... and when your down here, with me... YOU FLOAT TOO!

[Pennywise grabs Georgie's arm and pulls him toward the storm drain]

 

Do NOT follow this link or you will be banned from the site!