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Lewis Explains The Casino: "Why Are You Even Arguing" That This Is Not Rigged?
Round 2 of the HFT vs Reality death match just took place on Bloomberg TV. Once again the clear winner was Katsuyama and Lewis version of the real world as Manoj Narang finally lost all credibility with the mind-0bumbing comment that "speed matters less in today's market than it has ever mattered." But the Tradeworx CEO was a background singer compared to Michael Lewis who explained in his clearest analogy yet how the casino works and then devoured the anchor's constant efforts to play down the "rigged" market perspective... "it's very clear that people are being front run in the market... so, why are you even arguing about this?"
Plenty of good stuff in the clip but this little exchange summed up the problem perfectly...
Lewis explains the game, exposes the rigging, and slams the mainstream media's "defense" of this...
LEWIS: So of course the tourists get fleeced all the time in the poker games, because they don't know the deck is rigged. The poker players pay the casino a cut of what they make. The casinos, operators, pay the tour group - the tour group company money to bring in the tourists.
So in this case, casino's the exchange, the poker players are the high-frequency traders, and the tour group operators are the banks and the brokers that handle the stock market orders. And I think the analogy is pretty close. So is that rigged? Is that a rigged game? I think it is a rigged game.
SCHATZKER: Well, it's rigged only inasmuch as...
LEWIS: Why are you so invested in the idea this is fair? Why are you even arguing about this? It's so clear.
SCHATZKER: Me?
LEWIS: Yes, you seem to be. I mean, it's very interesting. But you seem to be - you can see, it's very clear that people are being front run in the market. There's plenty of evidence in the book.
SCHATZKER: Their orders are being anticipated...
LEWIS: Anticipated and run in front of, that's right.
Shocked...
And then Manoj Narang comes in... and the long words surge and the credibility plummets... "there are so many assertions that are provably false... oh my gosh so many..." crickets... and then finishes off all credibility with "speed matters less in today's market than it has ever mattered."
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Sunlight is a great disinfectant.
And it can also be used to good advantage in torture: staked out in the blazing sun. Keep in mind what your place in the master+slave game is... (you might want to reconsider the wonders of sunlight)
This is unbelievable! My ears bleed when I listen to this anchors... Downgrading this whole issue, searching for at least one good side of HFT, etc. THIS IS UNBELIEVABLE! I really feel sorry for Lewis and Katsuyama, because they have talk to them like to lil kids, and on the other side listen to those FUCKTARD thieves defending their FUCKING HFTs! FUCK THEM ALL! Sooo disgusted...
Now we get the facts at 10:45, Lewis says Goldman Sachs knows a crash is coming and Goldman doesn't want to get blamed for it so they are backing a new system.
GAME OVER for WALL STREET
http://www.youtube.com/watch?v=I0Yx7RnHAcw
https://www.youtube.com/watch?v=I0Yx7RnHAcw
A disciplined floor trader could make a decent living ( nothing like billions /annum ) by either buying or leasing a trading membership and conducting his business on a NOT FOR PROFIT exchange floor. An above average FLOOR BROKER could do the same thing. A most important asset to do this job was an ability to add , subtract , multiply and divide quickly , not nanosecondly. I recall in the late 80s there was an effort made in the crude ring to slow trading down by blowing a whistle to alert every trader that there had been a price violation , and that it needed to be addressed. That effort had a life span of about 20 hours. It was quashed , and IMHO rightfully so , since the floor was no place for the squeamish. One either paid attention and remained focused or one did not last. As for me personally , the speed itself is not the issue. The issue is the lopssided nature of the playing field , and the sanctioning of said lopsidedness by each exchange ; but that is what FOR PROFIT got us - a tip of my hat to Santelli. Nobody on an exchange floor has an unblemished halo , including Compliance people. What we have today is a situation where a firm ( and I don't believe they are alone in this ) has not had a losing trading day in over 1,250 straight trading days. That is tantamount to Ruth hitting a homer every time he stepped into the batter's box. It brings into question whether Ruth , or similarly any trading firm , is playing fairly - since the statistics fly in the face reasonableness. There are a lot of unemployed and seemingly unemployable former floor people , people who UNDERSTOOD their fiduciary obligation , who are rooting for " all the poison that lay in the mud " to hatch out , to paraphrase from I CLAUDIUS. Nobody should ever fear the truth.
+1 for the 'I Claudius' reference!
"What we have today is a situation where a firm ( and I don't believe they are alone in this ) has not had a losing trading day in over 1,250 straight trading days."
Very strange indeed. Smacks of either total incompetence or extreme hubris. A smart person gaming the market would at least throw in a few losses to cover their tracks.
"A smart person gaming the market would at least throw in a few losses to cover their tracks."
It's robots... any human associated with the firms is on some far-away beach totally caring less...
Totally rigged. Starve the beast and STOP PUTTING YOUR FUCKING MONEY INTO THIS FARCE....problem solved. No mercy on suckers who play in this casino.
As I understand it, the little guys have already left the building. It's the paid to play that are getting fleeced here: pension, insurance, municipal, state and corporate portfolios and so forth. Big money that's been pushed into equities courtesy of the Fed's zero rate policy.
Even at the best of times the little guy is a drop in that bucket.
The "little guy" has not left the market. His pension funds are heavily involved. Where do you think that liquidity comes from.
It is not all QE....OR IS IT???
It's both.
Desperation all around. Old money ain't holding up, so New money is introduced. It's all come down to a fixation with numbers without those numbers really having any connection to reality (other than people believing that they do- accepting the "losses").
"His pension funds are heavily involved. "
Understood. That and mutual funds. I was refering to the retail investor and small independant traders, but point taken.
I've watched all these interviews and read the excerpt form his book yesterday. I have came to the conclusion that without HFT we have no market. I'm sick of hearing how it just steals pennies look at the ramroding each and everyday at the open on the Russel 2000 futures. Only a fucking computer could and would do that.
Look at what happens when you throw up 5 pounds of something I don't care how liquid. I don't just use market orders I use them, then cancel, then place it a .25 higher. That seems where the stock ends up after you headfuck these HFT's.
The problem i'm starting to see play out here is the way that Lewis is protecting the banks and even making them look like the victim. Notice all of this is about HFT, not about the collusion between HFT the banks and the FED.
GS is already playing the victim card. The banks and FED could shut this down, re program it and claim to be heroes! sic!
It's just a big charade. Yes, Lewis is good and all, and, really, I've go no idea whether he's in on the game of three-card Monty or not. Just like all the other folks who can point out the errors of the existing systems, the PROBLEM comes down to the "solution," and almost every time these enlightned ones pitch some "solution" at us. If TPTB's agents (such as GS) back something then we know that there's no changing of the guard going to happen.
Meet the new boss... who will still slice off fractions from our lives every second of every minute of every day of our lives, until, that is, we're dead.
Does anyone have the Jon Stewart interview with Michael Lewis? It was removed from Youtube.
I would imagine that it's on Comedy Central's site. (so it can be served up with a nice helping of commericals; but, hey, they're making it available!)
Of Course the Markets Are Rigged
The buzz yesterday was all about the book by Michael Lewis, Flash Boys: A Wall Street revolt. I first heard the headline on 60 minutes “The Markets are rigged” and my blood started pumping. I thought to myself, wow, they’re…
Watch As HFT Debate Devolves Into Epic Screamfest In Milliseconds
Brad Katsuyama, a Canadian who works on Wall Street, is emerging in some quarters as a hero for revealing the inner workings of high-frequency traders who critics have accused of rigging the stock market and taking investors for billions.
LATEST NEWS:
http://tersee.com/#!q=rigged&t=text
When it crashes and turns to shit I bet they blame HFT.
...and Russia.
OH! - OH! - OH!- RUSSIAN HFT ALGO-BOTS!
Be sure to also include China; and, since it's "in the news," "atheists" (because, well, they've got to start the purge somewhere, and atheists = Communists)
Rigging Deniers are the new Holocaust Deniers, bitchezzz!
Rigging Deniers are the new Holocaust Deniers, bitchezzz!
Accoding to modern philosophy, we don't have the political economy of speed yet.
The new and improved digital Rube Goldberg machine. A whole lot of moving parts to perform an unneeded task but this one steals your wallet!
"but this one steals your wallet!"
Only after first polishing it and making you go "ooh, ah!"
Rube Goldberg machine running parlor tricks. What could possibly go wrong?
I can't wait for Goldie Sack to turn my hard earned labor into half its value in paper.
Well, fiat's BAD for you, so just figure that they're operating like they're upholding the hippocratic oath (as they perform those surgeries).
Hey Manoj Narang you weasel-eyed mf.
You can have all the low latency you want. In fact you can have all the computing power that you want, all the speed you can pay for but there is one thing you f&*%ing cannot have you low life scum sucking parasite...
You don't get to see my order before it hits the market!
Then let's see how much money you make you disingenuous little sh&t!
A very good friend of mine has been referring to him as " Manoj a Trois " and by the way his office in Red Bank , NJ is only about a quarter mile away from an FBI office located also in Red Bank. I don't think he'll ever be indicted for any crime , however.
He doesn't see your order you libelous cretin. I bet he can sure code circles around you.
Shout louder maybe he's a witch.
You are drunk and talking in circles; address the topic or go to sleep.
The discussion is libelous and founded in populist drivel. You are a paid troll, go suck off the DNC.
Oh wow, you are a heavily invested little piece of work. So how big was the VIRTU placement you were promised that has just disappeared in a puff of too-late-to-the-party smoke.
Poor diddums. Keep screaming friend, it is cathartic.
Crybabies. HFT got my wittle nest egg. HFT is the boogerman. HFT hurt my feelwings.
Time to get a job driving a truck my friend.
You've really got to read the comments you are posting about.
I didn't say anyone got my nest egg, I didn't say anyone took my money, I said... (God grant me serenity when dealing with fuckwits)
...they screwed with my trade, so I went to a market were they couldn't do it, and now I am happy, but God only knows why I am talking to you.
"Time to get a job driving a truck..."
Driving a truck is a dignified way to make a living. I speak from 10 years of experience in the tanker trade, but even the lowly dump truck driver supports a family and thereby his community.
Why, they even sing songs about us:
http://www.youtube.com/watch?v=d2p_7ywGV9g
http://www.youtube.com/watch?v=yb_2XC-P5ig
http://www.youtube.com/watch?v=oHqVV9oH3As&feature=related
Alright! One more for the road!
http://www.youtube.com/watch?v=5BHSlthA3Ac
Yes, that is correct, he doesn't get to my order ahead of the market on Globex, but he and his ilk did get to f&%k my orders every day on ARCA and NYSE, NASDAQ et al, which is why I left.
And by the way, my previous post wasn't libelous because I didn't accuse him of anything, other than being a weasel-eyed mf... but you are right, it was grossly unfair to weasels.
As to coding, as I said in my previous post, I don't give a s&%t about his ability with a computer, I know that I can out trade him and that is all that matters.
As to you, Mr can't-see-the-wood-for-the-fu%$ing trees. How dare you call me a cretin, I call you a troll! So there!
I agree. HFT isn't the problem, the market structure has produced this inefficiency. BTW, all markets abhor gargantuan orders. Get used to it.
Read this and get back to me.
Listen to the arguments and stop screaming. Lewis and Katsuyama aren't saying ban HFT's; they are saying you are playing in a rigged game, so find another game.
I did, and it is just dandy. My problem with Narang is that he is trying to hide the fact that he is using legal inefficiences to make money from parties who are disadvantaged in the trade AND he is amplifying the disadvantage in a way that net-net, harms the market.
If his abilities are so great then let's see him join the guys on IEX who are obviously (to use your words) crybabies and suckers and pants wetters. He should be able to take them to the cleaners in about a week....
Coz, after all, he's an awesome coder... which is what finance is all about right?
Oh come on! You show me yours first and...
And to think that people are still falling for this!
Government for the 0.1% paid by the 99.9%.
I like all the clowns that run around in US flag jackets on the traders floor and the ending bell ceremony. It's all a huge fucking joke.
It appears that you're still terrorized by your childhood memories of the circus. Well, today it's different! The showmen have ensured that NONE of the clowns are to wear frowns! It's all OK now...
Why just say HFTis rigging markets? The whole fucking market is rigged. Bonds, stock, real estate, commodities, you name it.
Like I've been saying. This is a Murderers' Ball. Complaining about bad things happening kind of misses the context, the Big Picture...
did I miss the LIBOR, FX talk with bid rigging... Oh never mind 240b or a quarter Trillion in WINDOW DRESSING and HFT is the problem?? how about the hundreds of trillions in derivative traiding.
WTF this is UNFu#king belieavabel propaganda distraction the moral hazard of QE.....
But, but... it's getting viewer share from Dancing With The Stars. Are you against that? </sarc>
LIBOR and FX connect directly to the big banks and to governments. Oh, hey, look! a distraction! (squirrel!)
The mass media in the pockets of the banks (or perhaps unconsciously viewing themselves as among the powers that be) and their political governmental cohorts which have rationalized electronic trading front running as ok if you pay for the privelege, the mass media can't think. The mass media only parrots the propoganda and drowns out whatever this lame ruling class of bankers and politicians and media think is any notion that would undermine the godless given right to steal from everyone else.
Lewis is perfectly correct it is obvious it is front running. That someone does not perceive this is amazing and shows the extent of the indoctrination in misinformation that has occurred among politicians media and banks (It only used to be Mobile Oil with their preposterous ecology or oil is healthy ads or such).
The banksters, the mediasters, the polisters or collectively the Ruling Hucksters believe their own shit.
Amazing.
An easy group actually to remove from the scene because they are so pathetically stupid. Only the general behavior of the %99 percent to not give a shit what their politicians do has allowed such human garbage to gain power. Simply throw them all out. It would be easy if anyone actually cared. Instead en masse we let them destroy the world and us. Wish it weren't so.
"An easy group actually to remove from the scene because they are so pathetically stupid. Only the general behavior of the %99 percent to not give a shit what their politicians do has allowed such human garbage to gain power. Simply throw them all out. It would be easy if anyone actually cared. Instead en masse we let them destroy the world and us. Wish it weren't so."
It's the System!
Go ahead and name your era in which it was all better.
Do not mistake the symtoms as the disease. This is a growth disease. This fully exhibits the nature of empire collapse. The ONLY difference is that of scale, that the connections link up pretty much all of humanity.
Do not ask. Do.
The ultimate commentary on politics:
Scotch
+1 for a real solution. Three fingers of single malt in your honor
Great idea, I will pour myself another one.
CAUTION, HFT discussion: ZH LOSER CRYBABY ZONE.
Well when Lewis produces data [he won't] then maybe someone besides the monkey cage and the dicatorship of the proletariat will listen.
Put on your big boy pants to trade in risky instruments. Conversely, go loot with govt marauders for riskless returns.
I thought we obsoleted loudmouth coke happy pit traders shouting down everyone about how smart they are, way back before decimalization. Now they get center stage why? Notice how the criminals think everyone is corrupt like they are. Still bitching about the SOES, huh. Too bad they think everyone should be a stone age moron who could't arithmetic their way out of a vegas buffet line and doesn't know silicon from silicone.
Next time your doctor shows up with electronics and imaging tell him no, you prefer leeches to maths because you rode there in a conestoga and you shave with a rock.
Yeah lets go back to the day when it cost hundreds in fees to trade and when the current rabble of loudest shouters invented skimming.
When did this blog become a populist menstrual rag???
Why are you angry? The fed wins anyway, so you're golden.
Please, tell me who exactly "invented skimming", list a date, on the Gregorian calendar, so i need n not cross reference.
Loser talk given the national platform in a so-called capitalist cuntry is annoying and indolence is a disease.
Michael Lewis wrote all about it. Read much? Why don't you paid commentors shut up and let the adults talk it over. We'll let you know what to type next.
When black and white became grey.
Sounds like you're worried your easy income stream could be in jeopardy.
"Conversely, go loot with govt marauders for riskless returns."
Projection much??
"When did this blog become a populist menstrual rag???"
Well, you seem to be the one "in the know." When did YOU figure it out? And, why are you still here?
RICO ACT applies yet again as it did with
Libor
pm manip
Forex manip
Data manip
And now HFT market manip
Yet our greatest regulating minds and law enforcement officials don't see a connection...they did with the mafia and it left it a hollow husk of what it once was in America
Worked for gangsters
Why not
Banksters?
Rule #1 in politics: don't bite the hand that feeds you.
"Worked for gangsters
Why not
Banksters?"
You missed the part where the gansters turned banksters. And, well... fractional reserve banking and fiat... when you accept a highly flawed premise you have bought into the game; you, as a "pot," cannot call the "kettle" black. It's the Matrix; there is no fixing it.
As to why the regulators don't "see a connection," well, who pays them? I'm sure that there are some folks who are trying, but are stymied by TPTB.
With or without HFT, the DOW is going to 20,000 - get used to it - this is the bigger fraud. HFT is a drop in a sea of corruption and financial fraud.
The DOW number is meaningless unless it's compared to something. It's all relative. And, well, I suppose a good comparison would be DOW vs. Employment, or DOW vs. Food Stamp Recipients (an inverse correlation- yeah, it's kind of a messy comparison, but I'm trying here!).
Haim Bodek's YouTube video clearly explained how the rigged "algo eat algo" HFT world operates... If criminal intent can be proven, the fines could be staggering. The pizza faced nerds will be left holding the bag, while the real perps will be taking the other side of this trade...
No honor among thieves...lol
Entitled crybabies the lot of you. Back up your myriad of false allegations with data.
What, you need more than the bailouts of corporations/banks/insurers from the 2008 "crisis" and $7+ Trillion of gravy slathered on Wall Street by the FED?
http://en.wikipedia.org/wiki/Texas_sharpshooter_fallacy
Fallacies abound in your fruitless troll effort.
Barn = FED.
"Sharpshooter" = HFT (and Wall Street)
I am all over that. I just contacted Kathaleen Sebelius. The facts will be forth comming. There will be data and more data, less some pertiant data, but who cares. The data will astound you.
Hey Gorden Gecko, wtf do you care? Aren't you a bit busy rolling in other peoples' money? What are you, fucking drunk? Go slumming the comments section cause skimming pension funds with one hand is getting boring?
Getthefuckouttahere.
It's officially on, she's got a nose like a witch:
https://www.youtube.com/watch?v=S2TiWRsKAg0&feature=kp
well, we did the nose..and the hat...but she's got a wart
I can't get the video to play. Some HFT guy must have hacked it.
Yep, I just got a pop-up message from him saying if I want to see it I have to pay him $0.01 per frame.
"speed matters less in today's market than it has ever mattered."
And why is that? Lack of participants?
I lost my ass gambling in a zero risk, S&P to the moon, super inflationary, free money environment where billion dollar thieves walk the streets, must have been those HFT guys, they look suspicious over there what the hell are they doing, working?
High Frequency Trolling.
You're soaking in it.
fix the fucking links!!!
Just wait until the FBI gets in there, Wall Street better hope they don't have another Harry Markopolos leading the way to the steaming pile... And or the Feds connection to the pile.
That is some priceless shit.
"It's a big club and you ain't in it!"
R.I.P. George Carlin, who saw through it a ways back.
One big fucking Ponzi; the Wall Street/Washington cabal - send your kids off to college or the military - grist for the mill either way - along with you.
All hail the New Rome.
<Insert know nothing vapid paid comment about current politicized issue here>
Yeah this blog has turned into a menstrual rag for losers who can't get a job outside Acorn or OWS.
WTF? Please elucidate Mr. Kotex.
I think he's angry and drunk.
You're not paid to think. You're paid to operate comment software.
Brother, you are lost.
Do not drink those lies, they are hollow mammon and the road to hell.
Don't feed the trolls!
How can they argue. On the base level brokers having been selling order flow FOR YEARS. The discussion I want to see is if the algos are tied to the brokers and they are front running their own customers. So far the brokers are getting a pass and the blame is on the "computers." Do these brokers have proprietary trading arms?
Manoj looks like a character out of Team America.
Shut her up. holy shit.
Shut him up too. "Lets talk about GS" fuck you.
What has become readily apparent from watching these interviews is that the hosts actually do understand if not know very well what is going on and their vested interest in maintaining the status quo leads them to ask incredulous questions in a pathetic attempt to complicate & confuse the issue (and thus maintain their own "security").
This is exemplified by their throwing around technical terms like SIP and consolidated order flow & direct feeds like they were common knowledge to every investor, yet when it comes to Lewis's very clear (& threatening) conclusions drawn from his research, they can't possibly be valid.
I think Zero Hedge nailed it yet again in predicting that HFT has become a mainstream issue because the timing for a market crash is approaching & "they" need to find a scapegoat....
Goldman apparently even admitted as much for the reason why they got on the other side of the "trade"....
The guy says, "In order to front run, you have to have a client". What an idiot. The "client" is the guy who initiates the order!
If a derivative falls in the woods, will the taxpayer hear the Casino woes? Fuck you and your subsizes world of free money. Bang, bang!
The money laundering is exposed at corporate level, you can no longer hide.
A whore is a whore and arguing about the price doesn't and never will make her a nun.......... Wall Street is a whore for sale to the highest bidder. This goat schtupp will eventually end. I think that is the herd all heads for the door at the same time,,, bank runs baby, real ones, not movie fantasy like in It's a Wonderful Life. God, guns, guts and a garden. Know your neighbors, be aware, pay attention. People including myself say they don't recognise the America they grew up in any more. Wait until the EBT cards stop working for 3 days or more. Game on,,,,,,,,
Bank runs? Who has money?
I'm thinkiing that this is more about the titans being unable to fabricate growth. And given that the ENTIRE economic structure is predicated on perpetual growth on a finite planet, well, go ahead and try to talk about That! So, as someone else noted above, it's a scapegoating adventure here. Problem is that it's kind of hard for people to pretend that the music hasn't stopped when all they hear is silence. We're all doing what silly humans always have done, be silly humans... it's all we know to do.
Narang states the problem himself; difference between the direct feed and SIP.
Why is everyone ganging up on Lewis?
Because if he is successful in exposing this charade the game is over, at least for a while.
Too bad he didn't follow it all the way through to the Fed.
"Too bad he didn't follow it all the way through to the Fed."
One cannot challenge the existence of "God."
Party is over. There's always two sides to everything. Believing that there was no "tails" to the growth coin was our big mistake...
At the end everybody was in agreement that Manoj was a Great actor (spokesman) for the status-quo, everyone chucked even the Bloomberg anchor. And it is so true, that if speed is not the problem then why buy and create faster microwave towers that are faster than the fiber optics cable HFT'ers use, Manoj's best impersonation of Alan Greenspan's "Fed Speak" does not jive with the physically upgrade expensive technology HFT'ers are using.
Maybe it's GS and company saying that they're tired of paying for faster and faster computers? It's starting to dip into their bonus checks, and, frankly, that's where the line is drawn!
The female news reader with the red hair, she is really easy on the eyes, but holy FUCK is she loopy. Bloomberg TV should have just had her sit on Michael Lewis' lap during the interview. Man is she sexy.
are the people handling the peoples money mis-managing it?
clearly
Unless of course one should ahould apply legal greed to the mix and then one sees the protests become voices in a hurricane.
so, the ownership of the money is at the core of this question.
Hint: you don't own any of the money you think you have.
FUCK THE THE FUCKING STOCK "MARKET"..
The stock market isn't the problem. That is, it's a symptom. The disease is the addiction to growth (and, broken record time, perpetual growth on a finite planet is not possible- despite all efforts to promote growth, growth WILL stop, and for a growth-oriented system that's a mark of certain death).
Just what would the actual volume of the market have been without HFT? It would seem that more than half of trades would be HFT based with something near 50% being simple skim trades. What does that say about the health of the market?
Are these good questions that the TV people should be asking or am I just dumb? The door is open lol.
excellent question.
That is the whitest Indian man I have ever seen
Maybe he saw a ghost?
https://www.google.com/search?q=skin+whitener&tbm=isch&tbo=u&source=univ...
I'd first encounted "whitening cream" when down in Manila, saw a big fucking billboard advertizing it. And, well, it's Manila, so around it are all sorts of signs of poverty. I felt outrage. Fucking marketing shit. Thank god my wife is old-school, her skin is an unadulterated, beautiful brown.
I think that Wall Street would be nothing without Madison Avenue.
Off Topic, "Mass Shooting at Military Base, the same base where Muslim officer gunned down over a dozen soldiers years back in a muslim terror attack. So now another shooting, 4 dead, perhaps more. I've yet to se the motive here. One wonders when someone goes after a Wall-Street firm or Bank. A revenge sort of thing from someone who has felt wronged by the wealth transfer machine form the 99% to the 1%. HFT has been well documented before this Lewis book came out. I was thus surprised at the big stir Lewis' book caused. I can clearly remember reading all the various systems that went into HFT including the building of special Fiber Optic cable systems from Chicago to Wall-Street and the basing of servers in a building right next to the exchange, dealing with the speed of light, the advantage of closer proximity still holds good. All the information about HFT firms hiring physics and math graduates and snatching them up from research teams engaged in Astro Physics and Quantum particle physics to engage in writing the algos needed to make HFT work. All this was in the public domain and the returns that showed HFT traders showing hundreds of days of gains with no losing days at all. We know that in a real market, a free market, the laws of math and physics make these no lose strings of months and years to be statistically nearly impossible.
Yet this book comes out and HFT is now all over the financial news and is being debated as to regulation in the future.
From all the evidence, the HFT as it is practiced today is not trading, it is not a market activity, it does not engage in price discovery, it never take delivery of stocks bought, The facts show beyond rational dispute that HFT is a skimming operation that puts a third party between all trades and market makers. You can only submit an order, that is front run by the third party who steps in front of you, raises the price and then hands the new price they have created by manipulation to you. You can never buy a stock without paying the front runners third party their ill gotten cut. Though this is all legal at present, some argue it is legal and fair and just and the way markets should be. Those who argue that point claim that HFT is free market capitalism at work, anyone smart enough to get between traders and market makers deserve their skim because of how smart they are. I find this argument to be void of anything but dogma and the big lie that today's markets are capitalist competitive free and open trading. Facts prove this to be false.
HFT is legal, so the gains are legal. For now, I doubt that supressing HFT by regulation or by creation of HFT proof markets will hurt anything. I like the idea of the guys creating an HFT proof market, were I a trader again, I would seek to do all my trades on this new HFT proof market, they deserve the business and let the HFT crooks rot in hell when nobody will place an order on the markets they control.
yea HFT is sort of old hat, and a big reason I don't own a single stock or investment vehicle that's traded...
since like... 6 years ago?
The strategies attributed to HFTs have existed in some form or another in prior market epochs, and many of those same strategies don't require HFT. The common denominator is trust, and the behaviors of the broker-dealers with whom a great deal of trading business is concluded. Ergo Michael Lewis' ally with, and prominent notation of, Goldman during his showing brought about considerable credibility questions.
P.S. Manoj has won the debate every time.
Nice monicker, Manoj.
So, now the tack taken by Manoj is to dismiss Lewis and Brad as 'conspiracy theorists' and therefore should be ignored. Nice tactic - works well up until the conspiracy theory becomes conspiracy fact, as we've been witnessing an awful lot lately.
I still can't get the video to play. One of those HFT guys must have hacked it.
Yep, just got a pop-up message from them. They want to be paid $0.01 per frame for a view of it.
Go to 15:38 in the second video for the funniest part.
Ahh, Manoj, he just went down in history as a clown and doesn't even know it yet. Years from now, this clip will be replayed and parodied mercilessly on YouTube.
...
Manoj: "Speed matters less in today's market than it has ever mattered in the history of markets..."
Katsuyama: "Why are you selling microwave towers?"
Lewis: [loses it laughing] "That's a good question!"
...
Ruhle: [hand on Erik's shoulder, giving him a hard-on] "Could we face another flash crash?"
Manoj: "I don't think another flash crash is possible given the changes that regulators have made since the last one, and that's because I actually understand how the flash crash occurred and I believe in the official, well-documented account that the CFTC and the SEC jointly produced"
Katsuyama: [incredulous] "That someone pushed a button and it all happened?"
Manoj: [unaware of ZH's record with conspiracy facts] "Well look, here's the thing, um, the market is very, very complex; I think we're all in agreement on that, and that's a bad thing, ok? But, as is happening in many walks of life, ah, when people are faced with complexity that they don't understand, they have a tendency to resort to conspiratorial explanations of the facts..."
...
To sum up. The benefits and costs of HFT are multi-faceted. Latency arbitrage (front-running), between direct feeds and those trading off the consolidated feed, is just one of them. The solution is to reduce the time difference between direct feeds and the consolidated feed, that is all.
Katsuyama advocates reducing the difference by slowing the fastest down to the slowest. This is cheap, easy, difficult to game, and very easy to maintain dynamically with regular network speed testing.
Manoj advocates modernizing the consolidated feed to bring it up to speed with the direct feeds, which have an incentive to be faster than the consolidated feed. This is expensive, will be constantly gamed and effectively just creates an endless arms race for speed (from the guy who says speed doesn't matter LOL).
It's obvious which solution is the best, I mean, mind-numbingly fucking obvious. Take the cheaper option that's harder to game. Manoj's approach just ensures that the shenanegans get more and more out of hand, faster and faster with rising complexity and huge capital misallocation until, inevitably, the arms race leads to a nuclear war (epic flash crash).
Katsuyama is the sane one. Everyone back the fuck down and disarm for the sake of us all.
I don't think another flash crash is possible given the changes that regulators have made since the last one, and that's because I actually understand how the flash crash occurred and I believe in the official, well-documented account that the CFTC and the SEC jointly produced
Destined to be a classic. never say never
Interesting in light of (my following comment) Lewis' appearance on Charlie Rose. Lewis talks of a battle happening within Goldman Sachs where, since they know another flash crash is both possible and likely, Goldman has a faction that wants to side with Katsuyama, since if GS doesn't, it sees itself getting blamed for the future flash crash.
Manoj is just running scared and saying stupid shit. His game is up. One does wonder though whether he and his peers will try a little sabotage on the way out.
Yeah, it's possible that it's got a bit of con in it. Kind of like showing off a fast car to attract the girls...
"One does wonder though whether he and his peers will try a little sabotage on the way out."
And when that moment should happen TPTB will have found their worm hole to sneak on to a new "improved" throne.
Quite possible that Manoj (and the other HFT monkey grinders being paraded) is playing the stooge and that this is all misdirection. The mess that 9/11 was meant to hide never went away and the compounding has only carried on. The scale, the stakes, it's of such magnitude that none of this is being performed by B-grade actors...
Michael Lewis is currently on Charlie Rose (whoops! just ended), which can be accessed via the Bloomberg website. It's pretty entertaining, because there are no dissonant voices to butt in. For any market wonks out there, what is interesting is the discussion of legality, the different views on legality depending on whether one is SEC, NYAG or FBI; stratification within the SEC itelf (older employees are with Lewis, younger employees---who hope to jump to an HFT firm as at least 100 former SEC employees have done---are against Lewis and Katsuyama); the apparent battle going on within Goldman about what the nature of that firm should be (which could be an entire ZH article in and of itself); the make-up of IEX, which includes a 60KM coiled fiber optic cable that---owing to the speed of transmission through the cable---obviates any HFT advantage; what large funds are on Lewis' and Katsuyama's side; and the "defense" HFT firms and their lackeys put forth to justify their existence (which Lewis takes apart one by one).
And damn...60 Minutes, Bloomberg (twice), NBC Today Show, CNBC, John Stewart, Charlie Rose....the publicity! All that's left is Oprah. Look for Lewis to be called before a Congressional Committee soon, since there are bound to be a few elected officials who see some upside to getting on his bandwagon.
Though some argue that Lewis is late to the party and that ZH was at the forefront (along with Themis) on HFT, where Lewis is important is that 1) he has greater access and 2) his championing of IEX and Katsuyama as the centerpiece of the story provides not just the outrage, but the solution (like that 60KM of fiber optic cable and other means of built in latency).
Maybe this is all just putting a fresh coat of paint on Fukushima #4, but the collective squirm this is producing makes for great theater. We'll know Lewis is winning when the HFT bots begin to point fingers at each other and offer to turn State's evidence and squeal on their peers.
they have been consigned to the realm of 'conspiracy theorists'. lol
This is one applecart that isn't going to be easy to upset
I think he's getting the airplay because basically everyone who trades actively "knew" what was going on, they just couldn't explain it mechanistically.
The main problem with ZH is that it can be a bit hard to parse at times. Just look at the number of comments on a contributed post by CalibratedConfidence (is he Bodek?). There's a dude, laying mechanisms out for all to see and hardly anyone commented or read the posts, even though it's on ZH.
Nanex, again, laid it all out, but unless one is an experienced trader, the significance of what Nanex has been saying for years is quite hard to grasp.
Lewis, by contrast, has a writing style where he lays out the facts carefully sprinkled in the stories of peoples' lives. One just absorbs brutal truths as part of a human narrative; he's a great story-teller.
I haven't read the book yet, but I hope it shouts out to Nanex at least, if not ZH, Themis and Bodek also. Nanex has been a lone voice for so long now, Hunsader & co deserve some credit. Hell, those guys were one of the primary reasons I stuck around at ZH. It was the only place providing a solid mechanistic explanation for why I was seeing increasingly shittier market and market-limit order fills over time, fills which were tangibly worse than what I'd learned to expect from watching the jostling "depth" on the order book. They explained how "phantom" quotes worked until I one day realized, holy shit: "THE BOOK IS A LIE!".
Losing faith in the market order, realizing just how badly you could be raped by bots if the book is actually a mirage, realizing that stop-loss orders are a risk themselves, is a terrible thing for a trader. I'm hardly surprised that trade volume is so dead vs quote volume.
It's all reality-based community stuff. From http://en.wikipedia.org/wiki/Reality-based_community
Yes, judicious study, but...
Power doesn't abdicate itself. HFT and its operators are just tools of POWER (TPTB). POWER is already off making up new realities.
The only signficant change will come about by a total collapse. Maybe that's what GS is worried about, that it, as powerful as it is (serving TPTB) it would be unable to continue should a total collaps occur.
The only real tool left for TPTB is war. War will enable them to take full control over more things, in the interests of "national security."
Not in defense of the HFT camp, but how certain are we that IBEX can't play with their delay, that the delay parameters cannot be tweaked (perhaps by the NSA)? And, maybe there's real threats out there, such as from foreign entitties (Russia?) that could try to work this, in which case the NSA/CIA needs to have backdoor access?
NASCAR made teams put restrictor plates on their carburetors. Maybe HFT'rs need an extra 60KM of fibre optic cable...or whatever length of cable it takes to level the playing field...lol
And who is going to inspect/uphold the regs?
This is all such hand-waving as the collapse approaches...
Can anyone recommend a brokerage firm who will not front run trade orders ? I am getting fucked at my brokerage firm lately. I put in a sell order for 1000 shares at the bid when there was several thousands bid shares there. The minute I click the place order button shit happened. Many trades changed hand at the bid and I got 3 shares sold. A few days prior and today it gets to be even more bizzard. I typed up an order to buy 100 contracts of a call option at $2.67. I click the preview page which then led me to a summary of the trade I was about to place. Instead of placing the trade by clicking the " place order " button, I switched to the portfolio page to see how much cash I have left and tried then to adjust the price by entering a new order as the price was starting to drop. Guess what, while I was busy typing up this new order and even when I did not click the " place Order" button for the prior abandoned order , a trade went through and 100 contracts was bought at the $2.67 price for me.
I had a similar experience a few days prior and I thought I was making a mistake at that time unknowingly. So I was extra careful each time since then to make sure I did not enter any order accidentally. Todays trade was bizzard to say the least. It was as if someone was watching me as I typed and placed my trade before I authorized it.
Also, today I wanted to sell 9999 shares of a stock at the bid when there was about 5000+shares at the bid. The minute I click the place order button , all hell broke loose. Over 20000 shares changed hand and I got 600 shares out of 9999 filled. Tell me I did not get front run. I want to fill a compalin to the SEC but I think they will just laugh at me. I want to exit my current brokerage firm. I am just one of the many mom and pa so guess which brokerage firm that is.
Why are you in the market?
Go by a lotto ticket. Same thing...
Why am I in the market ? I need the dividend for my living expenses.
This video seems to have been pulled from every media channel and outlet.
Because, after all, it cant' just be news, it must be the right news.
It's hard to say which is more rigged, HFT or the mainstream media.
"This video seems to have been pulled from every media channel and outlet."
Even Bloomberg (whose program it is)?
All I know is that I'm looking pretty good these days in my tinfoil hat thanks to Zerohedge.
To celebrate, I got a nice leather chin strap for my tinfoil cap. It matches my WWI flying goggles.
Yeah,... looking pretty damned good. The Big Shots look a bit panicked and squirmy.
Their worst nightmare is that something should become "fair".
Wait until the bastards see an army of tinfoil hats coming for them.
One must be sure to operate one's tinfoil hat properly!
http://zapatopi.net/afdb/
This recent media attention to HFT is great and all I suppose, but where the fuck was the MSM 6 years ago? This is old news to anyone here, right? So why is the MSM making a deal of it now after years and years of it going on? It's been no secret.
TPTB needed to construct their new realities. Now that they've done so this stuff can be ceremoniously buried. All will be warm and fuzzy once again...
SCHATZKER: "Their orders are being anticipated.."
That's like saying lying is a "gift for fiction".
http://www.investopedia.com/terms/h/high-frequency-trading.asp
This was the deal in 2009.
Hft trades saved the stock market. It officially died in 2011 after bouts of market churn. The FED and USG and exchanges traded the rule of law for liquidity. The markets were totally dead in 2009 so the exchanges offered .5 cent bounty to bid and ask trades just for liquidity because after the crash there was zero bid. Nada.2011 is was done.
That's the deal with the devil. Save a corrupt system so Obama looks like a hero. Remember how he said its a good time to buy. Or previous to that he asked why couldn't the market always go up at the rate of inflation. That gave Bernanke and his Keynsian blowjobbers a huge Woodie. Finally, after wrecking the markets, they could control money supply and direction.
hhFT is 100% illegal but the Fed and Obama gave these.assholes a grace period to run it up. Because, to a Keynesnwanker, deflation is inconceivable. Pull your money out. The system is broken.
You were doing fine until you let your Party Pussy-ness show through with the Obama rants.
The intelligence you showed prior to that got canceled by the Obama rant. The reason I'm grading as such is because POTUS has no control over any of this, this is the puppet-masters commandning things.
"Because, to a Keynesnwanker, deflation is inconceivable."
Deflation is inconceivable because it's a growth-oriented economic system and growth is dead, D E A D! Those wishing for deflation are only looking to pick up "good deals;" fine, but iknow this: this will all be akin to picking the meat off a bunch of corpses- this is the END.
Go survey a bunch of wealthy folks and you'll find, because they're sitting on a bunch of assets, that "deflation" is NOT what they want. Is it, then, any wonder why the Fed and company push inflation?
Got nothing to do with what I want or "think." Has to do with logic and pragmatism.
"Pull your money out."
TPTB don't have money, they have assets. Pulling your money out, assuming that you actually have any (and most do not), creates no advantage when viewing this as a battle with TPTB; and, if folks have their "money" in the casino, still, then I'd have to wonder whether they could be seen as competent in knowing what to do with it after it's withdrawn (yeah, a sucker is free to do whatever).
The money that IS being played with is mostly retirement shit, injected with "free debt" money.
"The system is broken."
Really? And this happened, let me think... after Obama came to office?
The system's very premise is flawed. It was broken in design. And this goes back way before you even existed. Even before Jekyll Island. Hell, one could pin it on "go forth and multiply" (at what point is that to stop? it's a finite planet).
I suppose that you could have trimmed "the system" to Wall Street. But, Wall Street is just the execution of THE System. It is the interface through which we are all controlled. It is not, however, THE system: TPTB existed BEFORE Wall Street.
Fuck, I can't watch these paper pushers anymore. I don't use their worthless paper to trade nor do I care if they set fire to themselves with an overheated nail gun.
When I look for my next meal, it won't be on Wall Street. When Wall Street looks for their next meal it will be full of lead.
Die you paper pushing cocksuckers.
That's the spirit! :-)
And about paper-pushers, think about this (http://en.wikipedia.org/wiki/Reality-based_community):
I'm betting that the REAL world wins out over these paper-pushers...
where the hell is matt taibi, niel barofsky, and a few other guys for the gang bang.
IF it was a competition over who could work the term "deterministic" into the discussion the most times, Manoj wins... however, aside from that, he comes across as a moron. Would be interesting to sit down with him over select charts and articles from ZeroHedge and NANEX and have him try to explain what is seen on the charts - might be some solid gold comedy there.
Looing for revelation from an actor is asking a bit. That is, what if Manoj (and other HFT operators) is no more than filling the role of the clown? Maybe this is the big finanicial folks tossing up balloon to see which ones were willing to be distracted by (accept)?
In the end TPTB get their new systems and their old ones will be erased of all their skeletons. Who is on Dancing With The Stars tonight?
Yawn.... who knew the markets were rigged in favor of the big guys (uh huh, okay, yup, burp)... I must say though that it is a nice change of pace to hear about something else besides that downed Malaysian airliner.
I'll keep repeating this:
HFT is a distraction. People need to be pin pointing the Fed and easy money.