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BATS Admits CEO Lied About HFT On CNBC

Tyler Durden's picture




 

It is now quite clear why BATS CEO Bill O'Brien was so agitated during the Tuesday's screamfest on CNBC. As The Wall Street Journal's Scott Patterson reports, under pressure from the NYAG, BATS has hurriedly issued a statement correcting the CEO's false comments during the exchange with IEX's Brad Katsuyama. After Katsuyama said "you wanna do this, let's do this" clearly giving him an out, O'Brien stated that BATS priced its trades off 'high-speed' data feeds when in fact they price their trades off a much slower feed (and therefore 'enable' the exact HFT-front-running that is in question).

Here is the clip in particular where O'Brien lies following Katsuyama's question... that BATS uses the high-speed feed to price its trades...

The exchange in question...

What do you use to price trades in your matching engine on Direct Edge?” Mr. Katsuyama asked Mr. O’Brien.

 

“We use the direct feeds,” Mr. O’Brien said.

 

Mr. Katsuyama, whose IEX dark pool markets itself as a haven for investors against high-speed traders, later brought up the issue again. “You use the SIP to price trades on Direct Edge,” he said.

 

“That is not true,” Mr. O’Brien said.

 

 

But as The Wall Street Journal reports, it was true

BATS Global Markets Inc., under pressure from the New York Attorney General’s office, corrected statements made by a senior executive during a televised interview this week about how its exchanges work.

 

BATS President William O’Brien, during a CNBC interview Tuesday, said BATS’s Direct Edge exchanges use high-speed data feeds to price stock trades. Thursday, the exchange operator said two of its exchanges, EDGA and EGX, use a slower feed, known as the Securities Information Processor, to price trades.

 

The distinction matters because high-speed traders can use powerful computers and superfast links between markets to outpace traders and trading venues that rely on slower market data, such as the SIP.

 

Full BATS Statement below:

Clarification Regarding Market Data Usage

 

April 03, 2014

 

BATS Global Markets wishes to clarify the market data usage of its exchanges. With respect to routing, EDGA & EDGX use direct depth-of-book data feeds for all major exchanges, and data from the relevant securities information processor (SIP) for certain smaller exchanges. With respect to the matching engine, EDGA & EDGX currently use the SIP, but will be transitioning to direct feeds from all major exchanges in January 2015. BATS BZX and BYX exchanges currently use direct feeds for both routing and its matching engine from all major exchanges, and SIP data from certain smaller exchanges.

Apparently the NYAG decided to make a public spectacle and to force O'Brien to shame himself (in a very low frequency fashion) publicly on Twitter:

And here is Nanex with the clearest example of just what the difference between the 'slow' consolidated SIP feed (that BATS CEO lied about using) and fast 'Direct' feed (that BATS actually uses enabling HFT to skim as seen below) means...

The trade time-stamps in the consolidated feed are not the original time-stamps shown in expensive direct feeds used by High Frequency Traders (HFT). The time-stamps are getting replaced right before they are transmitted to subscribers from the SIP (security information processor, which creates the consolidated feed). This means direct feed subscribers are getting more accurate core market data than consolidated subscribers: a direct Reg NMS violation.

 

 

The loss of original time-stamps makes it difficult to reconstruct accurate audit trails or make comparisons to quote data. It also renders any computations based on trade data (e.g. charts, technical analysis) inaccurate.

 

We matched a few seconds of SPY trades on June 3, 2013 from a direct feed (Edge-X) to the same trades from the consolidated feed. In the selection shown in the image on the right, the first trade (163.21 and 400 shares) has a time-stamp of 10:00:00.013 in the direct feed and a time-stamp of 10:00:00.243 in the consolidated feed, a difference of 230 milliseconds!

 

Download the complete list (pdf).

 

See this paper for more charts and data on this event.

Ironic that the two versions of the same reality are "blue" and "red" in this chart... which pill will you swallow?

This leaves us with two possibilities, either:

1) The CEO of BATS has no idea what his firm actually does and is merely happy to earn an impressive amount of money skimming off the rest of the population of market traders no questions asked, or

 

2) The CEO of BATS is a liar and is merely happy to earn an impressive amount of money skimming off the rest of the population of market traders no questions asked.

 

 

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Thu, 04/03/2014 - 20:01 | 4623303 chirobliss
chirobliss's picture

Yee-haa!!!

Bring me some more popcorn, this looks like fun!!

Thu, 04/03/2014 - 20:05 | 4623310 bardot63
bardot63's picture

The whores at CNBC are horsefucked.

Thu, 04/03/2014 - 20:05 | 4623313 Being Free
Being Free's picture

"For the matching engine, EDGA & EDGX currently use the SIP"

Now that ETrade baby has something real to cry about.

Thu, 04/03/2014 - 20:06 | 4623317 williambanzai7
williambanzai7's picture

This guy needs to have his nails done.

Thu, 04/03/2014 - 20:11 | 4623332 unrulian
unrulian's picture

By nails do you mean 2.5 inchers from a nail gun?

Thu, 04/03/2014 - 20:36 | 4623427 ptoemmes
ptoemmes's picture

A 10 penny driven with a sledge hammer.

Thu, 04/03/2014 - 20:57 | 4623493 DaddyO
DaddyO's picture

A 16d driven with a waffle headed, 24oz framing hammer would be more appropriate.

DaddyO

Fri, 04/04/2014 - 01:39 | 4623980 caustixoid
caustixoid's picture

finishing nails, done by hammer, one by one

Fri, 04/04/2014 - 11:17 | 4624922 Bearwagon
Bearwagon's picture

No, ... he shall die the slow way ... under ... the drill!
http://www.youtube.com/watch?v=TA4H_v_g6rg#t=6m41s

Fri, 04/04/2014 - 13:17 | 4625415 Husk-Erzulie
Husk-Erzulie's picture

All the thirty and under dudes are scratching their heads... WTF is a waffle headed, 24oz framing hammer?  

Fri, 04/04/2014 - 05:05 | 4624126 jmcadg
jmcadg's picture

With a gun I believe!

Thu, 04/03/2014 - 21:34 | 4623320 Dickweed Wang
Dickweed Wang's picture

You have to hand it to O'brain though, his delivery on camera is pretty slick . . .  my thoughts when watching the dialogue between him and the others on CNBC was "what a fucking weasel this guy is."

Thu, 04/03/2014 - 20:08 | 4623324 Excursionist
Excursionist's picture

What actually continues to amaze me in all this is the extent to which sentient humans, O'Brien allegedly being one of them, will compromise certain universal tenets such as "lying is bad, truth is good" to protect their power, money, etc.

No, this isn't naivete.  It's witnessing depths you previously thought didn't exist.... as in, "Surely this is the basement," but then realizing there are 1,000 stories further down.  Ad infinitum.

Thu, 04/03/2014 - 20:12 | 4623335 xavi1951
xavi1951's picture

Anyone want to bet prosecutions?  I say nobody gets prosecuted for any crime.

Thu, 04/03/2014 - 20:13 | 4623338 TN Jed
TN Jed's picture

As fun as all this is, the turn on HFT would be more believable if it wasn't happening so quickly.  It seems every power sniper was locked and loaded for this.

Thu, 04/03/2014 - 20:16 | 4623350 WTFUD
WTFUD's picture

It's no different to printing counterfeit money.
SWAT would be up my ass in minutes to close down my illegal operation.
Why then do they not close down BATS and the other exchanges immediately?(whilst investigating hafuckingha )

Rhetorical question? Yes! as the Sting has the blessing of the Fed (GS&JPM ) & GUBBERMINT.

FUCK 'EM ALL

Thu, 04/03/2014 - 22:46 | 4623746 nowhereman
nowhereman's picture

You have asked the question that is equivalent to why is Corzine still a free man.

Thu, 04/03/2014 - 20:17 | 4623353 EggSlayer
EggSlayer's picture

batshit

Thu, 04/03/2014 - 20:18 | 4623354 starman
starman's picture

what a fucking embarrassment the NYSE is! and the US! burn in hell both o u!

Thu, 04/03/2014 - 21:06 | 4623526 Algosaurus Rex
Algosaurus Rex's picture

Maybe it's time for that big extinction level event. Give the dolphins a chance to run the shop. They may be pesky, but I doubt they're front-runners...

Fri, 04/04/2014 - 04:53 | 4624121 ebear
ebear's picture

My money's on the bears.  Paws win over fins anytime.

Thu, 04/03/2014 - 20:20 | 4623358 oncefired
oncefired's picture

If I was sitting next to O'Brien during that - I would have knocked him out before 30 seconds elapsed

Thu, 04/03/2014 - 20:20 | 4623359 Kilgore Trout
Kilgore Trout's picture

Clearly Mr. O'Brien has a higher quality computer than do I... I mean 'we'.

 

 

Thu, 04/03/2014 - 20:23 | 4623377 Tinky
Tinky's picture

It may be worth pointing out that "William O'Brien" is an anagram of Alibi Lien Worm

Thu, 04/03/2014 - 20:31 | 4623407 tradewithdave
tradewithdave's picture

Honest mistake. In our next class we will discuss the meaning of "is is".

Thu, 04/03/2014 - 20:34 | 4623419 holdbuysell
holdbuysell's picture

1) The CEO of BATS has no idea what his firm actually does and is merely happy to earn an impressive amount of money skimming off the rest of the population of market traders no questions asked, or

 

2) The CEO of BATS is a liar and is merely happy to earn an impressive amount of money skimming off
the rest of the population of market traders no questions asked

 

I'm going with 1 and 2 combined. He's a greedy clueless liar.

Thu, 04/03/2014 - 20:45 | 4623451 percyklein
percyklein's picture

Of course he has no idea what he's talking about. That's not what CEOs do.

Thu, 04/03/2014 - 20:37 | 4623430 SweetDoug
SweetDoug's picture

'

'

'

Where was Piss-ani and all the cheering gang from CNBC, eh?

 

<crickets>

 

•?•
V-V

Thu, 04/03/2014 - 20:37 | 4623431 Angelo Misterioso
Angelo Misterioso's picture

Shut em all down, let the volume drop by 50%, let everyone living off this process go out of business - i'm so f'ing sick of all the cheaters - every newspaper i pick up has 5 instances of some politician or person in a position of power who is cheating  - if someone can make money in the market every single day for a year then that is criminal and anyone who defends it must be getting some of the profit...i.e. politicians, the exchanges, CNBC, all the HFTing firms, most of the wall street firms...our society is rotten to the core if people can't see this (and change it)... 

Thu, 04/03/2014 - 20:40 | 4623441 rainingFrogs
Thu, 04/03/2014 - 20:47 | 4623461 Shizzmoney
Shizzmoney's picture

Like POTUS, he is just paid to read off a script and sell the company line.  He doesn't actually do anything.

Thu, 04/03/2014 - 20:47 | 4623462 Seasmoke
Seasmoke's picture

Hard to believe they would send him out there so unprepared and thinking bullying would get the job done. They truly have no clue , how pissed off people really are. It's definitely going down this year. I have never been so sure. You could have bashed this prick , who no one even knows, with a BAT and the public would have cheered.

Thu, 04/03/2014 - 20:52 | 4623474 FredFlintstone
FredFlintstone's picture

That's how fucking criminals act.

Thu, 04/03/2014 - 21:02 | 4623513 buzzsaw99
buzzsaw99's picture

Obrien is the HFT frog, knee deep.

Thu, 04/03/2014 - 21:07 | 4623530 One And Only
One And Only's picture

omg omg omg

someone lied on the teevee

Thu, 04/03/2014 - 21:18 | 4623553 Duc888
Duc888's picture

 

 

I'm soooooooooooooooo surprised.

 

(rolling eyes)

Thu, 04/03/2014 - 21:27 | 4623566 dexter_morgan
dexter_morgan's picture

<surprised face> No...Really? Bill O'Brien lie?

Who is investigating how the Fed and/or gubmit are behind all this bullshit fraud in order prop up the markets?

 

Thu, 04/03/2014 - 21:32 | 4623567 pelican
pelican's picture

So does this 401k plan which the government says I join the club or they will shake me down for more money is corrupt? You don't say.

Let me guess. No one goes to jail and everyone get bonuses

Fri, 04/04/2014 - 04:46 | 4624118 TheRideNeverEnds
TheRideNeverEnds's picture

Your principal loses not withstanding; yes everyone gets bonuses.  

Thu, 04/03/2014 - 21:25 | 4623568 Joebloinvestor
Joebloinvestor's picture

Everyone missed the rest of the announcement.

"by the way, the markets are rigged".

Thu, 04/03/2014 - 21:25 | 4623570 Rising Sun
Rising Sun's picture

Katsuyama sounded more credible.

 

O'Brien - isn't he the white supremist from that Seinfeld "back seat in a limo" episode?

Thu, 04/03/2014 - 21:27 | 4623575 ReactionToClose...
ReactionToClosedMinds's picture

classic ....... and we are the muppets?!    thank you ZeroHedge for doing what the 'news' media somehow cannot do.  Where is the mighty investigative news journalist James Stewart?  Oh, that's right ...working obvious district attoenty leads to write space filler for NY magazines

I would contribute to a fund that would privately & independently investigate Jon Corzine since our 'institutions' & 'jornolistic news' media seem to want to ignore this obvious issue.

Do I hear a drone outside?   But I am an American citizen Mr Attorney General Holder ..........

 

Thu, 04/03/2014 - 21:30 | 4623579 GoldenTool
GoldenTool's picture

If they are talking about this at this time everything was already built.

 

http://vimeo.com/28794878

 

"gaudent"

Thu, 04/03/2014 - 21:32 | 4623584 dexter_morgan
dexter_morgan's picture

Lewis and Katsuyama - just a couple of conspiracy theorists tryin to hawk their product.........

By the way, the book is excellent.

I remember the SCOTUS reinterpreted emminent domain where private property could be condemned to be used for commercial purposes. That 400 strand fiber cable between NJ and Chicago couldn't have been the reason for that could it?

Thu, 04/03/2014 - 21:33 | 4623586 pelican
pelican's picture

Working on Wall Street sounds awesome, everyone gets bonus money and no one goes to jail.

Thu, 04/03/2014 - 22:04 | 4623656 TN Jed
TN Jed's picture

It's nothing but coke and mirrors.

Thu, 04/03/2014 - 21:39 | 4623599 Yen Cross
Yen Cross's picture

   I thought Bats used sonar for their trades.?

Thu, 04/03/2014 - 21:43 | 4623615 roadlust
roadlust's picture

Either choice is the same. 

On the one hand he is only an "executive," which means he doesn't need to know anything other than to say what he is supposed to say, and who sends his paycheck. So it's quite possible he's just ignorant.

The fact that he might be a liar is also a prerequisite for being an "executive" on Wall St, so both could be true.

Thu, 04/03/2014 - 21:44 | 4623617 zstard
zstard's picture

We should all be given BATS and a few minutes with this guy.

Thu, 04/03/2014 - 21:45 | 4623620 bardot63
bardot63's picture

T. R. T. F.   Too Rigged To Fail.

Thu, 04/03/2014 - 21:51 | 4623636 exartizo
exartizo's picture

Hey NYAG:

...can  you get the 200k back for me from these *fuckheads* that I lost to them trading back in 2008?

No?

Then shut the fuck up.

Thu, 04/03/2014 - 22:03 | 4623652 Femme Meatwad
Femme Meatwad's picture

Goldman supporting IEX so it can front run client trades? Yep. Why is ZH supporting this nonsense? Moreover, the markets have always been rigged, and it is a clear matter of distinguishing just who is the worst actor. Bottom line is this has always been a CASINO, and the predators are the largest criers. Me thinks ye protests too much...QED

 

Thu, 04/03/2014 - 22:36 | 4623726 Sathington Willougby
Sathington Willougby's picture

ZH is paid off to promote this fatuous whining by your wonderful tax dollars funneled to the DNC, RNC and other such bottom feeders.  Posing as free thinkers, now they're just as happy to support the big govt religion to force a transaction tax tithing.  Either that or they're getting nicely played.  Played.

Bring in the bit-orcs and the comment-bots to set us straight on who the REAL thieves are.  Just like OJ Simpson.

Fri, 04/04/2014 - 03:02 | 4624031 Tall Tom
Tall Tom's picture

Exposing a problem years before the MSM picks it up is not getting "played".

 

In fact ZH did not propose any "solution" , especially Government Sanctioned solution, to my recollection. (My memory may be faulty at times...) Thus the DNC and RNC would have nothing to do with that initial exposure as they propose their brand of "Government Solutions".

 

So just what in the hell are you writing about?

Thu, 04/03/2014 - 22:04 | 4623655 dexter_morgan
dexter_morgan's picture

So what is the real purpose and need for stock markets, why were they created and what need were/are they supposed to address? Does HFT advance that purpose?

Thu, 04/03/2014 - 22:18 | 4623690 Dre4dwolf
Dre4dwolf's picture

I dont understand why we need a stock market anymore, the only securities that should be traded are those that offer dividends (share of profits).

If a stock does not offer a share in profits (dividends) then it is no different than investing in a crypto-coin stamped with that companies name and logo.

The stock itself has no value.

Take any typical share in XYZ corp, XYZ corp is valuated at a billion dollars.

Its stocks offer no dividend and no share of profits.

Joe buys stock in XYZ.

??? what does the stock do?

Nothing

If the company goes broke, chances are Joe will not get a share in the companies liquidation.

So the stock in a sense is worthless, its a "collectible thing" to show "emotional support"  in a company.

 

People should buy into a company, because they expect to have a share in the profitable ventures of that company.... not because they expect someone else will be stupid enough to buy that share from them.... in the future for more even though the paper itself....does nothing!

 

 

The stock market is a SCAM, run by corporations to raise capital they don't need, whenever they need capital they just issue new shares into circulation and wala sell them before the inflation in shares is noticed by the market.

Thu, 04/03/2014 - 22:29 | 4623714 Sathington Willougby
Sathington Willougby's picture

Uhm don't look too closely at the currency then.  You'll be none too happy with that facade either...

I love the premise here guys, you should develop it more.  Explain to me just why and how people shouldn't be allowed to freely enter into contracts if they choose to do so.

Fri, 04/04/2014 - 03:12 | 4624035 Tall Tom
Tall Tom's picture

When a contract is fraudulent then it is not moral.

 

If somebody wanted to sell their underage daughter for sex shall that contract be allowed? If someone contracts for the murder of another shall that be allowed?

 

Stealing and fraud is immoral. So is Murder and child prostitution. There are actually moral standards for a society to function coherently.

 

But perhaps you do not choose to do that.

 

I understand that there are psychopaths and sociopaths whom are attracted by the anti-socialism slant of the Libertarian and Anarchist philosopuies.

 

But not all whom espouse anti-socialism philosophies have an antisocial personality. Some may but fortunately those are very few and far between.

Thu, 04/03/2014 - 22:59 | 4623765 dexter_morgan
dexter_morgan's picture

I disagree.

I was thinking more along the lines of this:

"The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional financial capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange affords the investors gives them the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments. Some companies actively increase liquidity by trading in their own shares"

It is a means for corporations to raise capital for expanding their business, a means for investors to hold shares in companies which can give a return on investment that is better than a savings account, and a source of liquidity.

How does allowing a small group of HFT companies the ability to front-run the market and create phantom quotes advance any of that?

 

 

Fri, 04/04/2014 - 04:39 | 4624112 Seer
Seer's picture

"It is a means for corporations to raise capital for expanding their business"

There it is, there's the key word- "expanding."  From http://www.merriam-webster.com/dictionary/expand

: to increase in size, range, or amount : to become bigger

: to cause (something) to increase in size, range, or amount

: to make (something) bigger

GROWTH!  the assumption that always goes unchallenged, unquestioned!

How is any of this to work in a no-growth environment?

All those pensions, all those "investors," all looking for a return, returns that can ONLY come from growth.  No growth.  Tricks and fabrications are all that's left: without, that is, large-scale wars.

Thu, 04/03/2014 - 23:19 | 4623806 magnetosphere
magnetosphere's picture

but your dividend stock theory is also a ponzi scheme.  you would only buy the dividend paying stock in the expectation of making a profit.

Fri, 04/04/2014 - 00:28 | 4623912 Dre4dwolf
Dre4dwolf's picture

The idea is

1) You buy a stock that offers a share in profits.

Its a contractual obligation say as the following example

Joe wants to start an ice cream shop, instead of getting a loan, he issues shares in his company and offers each share a given % in the monthly profits, people buy the shares and the shares are given a market value related to the value of the expected returns over X-Length of time.

 

VS.

 

2)IPO BOOM no dividends, everyone give me money to start a company K THNX BYE!!!!! GOOD LUCK SELLING your SHARES!

 

. . . 

 

Vs

 

3) Company has been profitable for years, it wants to expand its business so it offers shares to the public again with a dividend or monthly cut of the earnings, people again buy at market value (the value of the revenue stream/passive income).

 

 

VS

 

4) Company has been profitable, and wants to invest in expanding its business, it issues shares with no dividend and no cut of earnings and no guarantee of compensation if the risky venture goes bust, company sells shares, uses the money to expand and begins to earn more money, now the shares that were sold . . . are on the market floating around with no real value to them, the company is earning money, but those shares are not linked to those earnings by anything other than public sentiment.

 

It's a flawed business model no matter how you cut it.

 

 

I don't see how my original post was in err, it brings a valid point to the table.

 

Why do we need worthless useless common shares?, I am all for the free-market deciding what has value, but that doesn't mean I have to agree with a bunch of dumb monkeys assigning value to every un-backed derivative there is.

 

 

Fri, 04/04/2014 - 05:33 | 4624147 chindit13
chindit13's picture

While this shouldn't be necessary...(responding to both of your comments)

Actually it is more than dividends.  As an equity holder you have a legal share in the value of that company.  It becomes a store of value to you.  If, at some point, the company is sold (goes private again) you realize your percent share in the selling price of the company.  Reduce to the ridiculous...imagine you are the sole shareholder in a company, or to use another term (forgetting the liability status for a second), a sole proprietor.  Now let's say you make a good profit, but instead of taking a salary or paying yourself a dividend, you just leave the cash in the firm.  Is that firm worthless?  A "scam"?  Does your ownership have no value?

If you are going to question equity ownership in this way, then do the same for undeveloped land, collectibles, or even gold.

What's the point in owning gold?  It doesn't pay a dividend.  Does that make it, too, a scam?  It does not, because the owner believes there will be someone else at some later date that will buy the gold, either for coin of the realm or some other good or service.

In a sense, equities are easier to understand than something like gold, because equities are a percent ownership in an ongoing concern.  A company generates profit by providing some good or service, while gold generates nothing but the hope that someone will pay more for it later.  As profits from an ongoing concern pile up, the equity owner has legal entitlement to those gains according to his percentage ownership (note that profits are measured in coin of the realm, which could even be gold someday; it is a claim against whatever of value the company accumulates).  The "market" then puts a multiple on those earnings, based on the collective perception of continued growth or lack thereof.  Provided the equity portion of the BS is a plus, then even if the market price of the equity went to zero, the owner of the shares still has a legal claim on the difference between assets and liabiities, and could realize it if the company was ever wound down.

It would behoove you to pick up a basic economics text and study capital structure in general, and equity in particular.  Start with equity at its most basic, then go all the way through to things like "rights issues", "secondary offerings", and "preferred shares".

Fri, 04/04/2014 - 06:45 | 4624183 alibi
alibi's picture

what a (very well articulated) load of crap. manipulated stock market goes poof. which would i rather own: 1000 shares of XYZ or 1000 oz of gold? hmmm, tough one.

Sat, 04/05/2014 - 03:05 | 4627594 chindit13
chindit13's picture

Well, don’t you seem to be a clear headed guy with an unimpeded view into the future!

You might have noticed that the original poster was at a loss to understand the function and value of equity, which despite your fears has been, in some form, a key component of capital structure for about as long as your gold has had value. In fact, equity ownership has proved a better form of wealth preservation and accumulation than gold. One of the reasons, which in your haste to be angry and dismissive you overlooked, was that an ongoing concern is an ongoing concern, and can price its output in whatever form has value, or is considered money, at any time. That means that even if the world goes post-fiat, an ongoing concern can price its output in your personal favorite, gold.  If its produce had demand before any reset, it might well have value after a reset, too.

My post was geared toward explaining the legal claim which a shareholder has over---not the market price, manipulated or not, of the shares---the value of the assets minus liabilities of the ongoing concern. That realizable residual value---which the market puts a multiple upon---exists despite whatever shenanigans happen in the market. You got confused over the multiple put on profits vs. residual value of a company.   A dissolved entity can put its assets up for sale, and then take whatever value it has received in return for the assets to liquidate its liabilities. What’s left after that is available for the equity holders.

It’s a pretty simple concept, and it has been in use, enforced by law or by, well, force, for as long as people have allotted their excess capital to another’s venture, which is to say pretty much since the dawn of civilization.  It will prove true in any reset short of Mad Max.  And if the world goes Mad Max, well then the only things of value will be joules and calories.  Your gold will be as meaningless as a Francis Bacon work of art.

Sat, 04/05/2014 - 03:12 | 4627595 chindit13
chindit13's picture

dup...3rd world connection

Sat, 04/05/2014 - 03:12 | 4627596 chindit13
chindit13's picture

dup

Fri, 04/04/2014 - 11:39 | 4625001 magnetosphere
magnetosphere's picture

you would invest in a broad index of stocks in the expectation of making a profit, whether they pay a dividend or not.  but where do profits come from?  they are conjured out of thin air, and a positive expectation value of profits is only possible in an exponentially growing economy.  in an environment without exponential growth all our methods of capital formation are in trouble and the role of capital should be deemphasized.

Fri, 04/04/2014 - 00:17 | 4623899 Godisanhftbot
Godisanhftbot's picture

 really idiotic posting, huh

i want the fucking 8 seconds back i spent reading it

Fri, 04/04/2014 - 01:26 | 4623969 laomei
laomei's picture

Yea, I don't get that either.

I had a long-winded response, but basically what it boils down to is that it's nothing more than a giant ponzi scheme that gets wrapped up into other ponzi schemes to a point where it's systemic and any sudden shock to it will bring down the curtains on the entire show.  

 

Even more funny is the whole employee stock option scam.  Award options which at the time are worthless.  If the stock goes up, the employee gets the spread, while the company gets to write off the entire amount for taxes.  Stock goes from $40 to $45? Well, your 1000 options let you see $5k as an employee, the company meanwhile paid effectively $0 for that and gets to write off $45k.  While at the same time, you'll be paying taxes on that $5k.  Do it enough and the company can write off basically all their taxes, do it even more, and it's a refundable tax credit... meaning, a zombie corp can actually see profit off of it as long as they cook their books enough and have strong enough PR to keep the sheep in the dark.

Fri, 04/04/2014 - 05:21 | 4624138 ebear
ebear's picture

"I dont understand why we need a stock market anymore, the only securities that should be traded are those that offer dividends (share of profits)."

Few of the companies I invest in have profits, at least not initially.  Most of them raise capital to go look for stuff, like gold, uranium, copper.... some oil maybe, that sort of stuff.   Same principle applies in other areas, or so I've been told.  You have to raise the money first, then if you're lucky, somewhere down the road you make a profit and can pay a dividend.

However....

If the crew I backed are on a roll, why on earth would I want a dividend, since I'd only invest it back in the company stock? Kind of inefficient, don't you think?  Better to just leave it there and let it grow.



Thu, 04/03/2014 - 22:05 | 4623663 firstdivision
firstdivision's picture

I'd peg O'Brian as 3 = 2 + 1

Thu, 04/03/2014 - 22:21 | 4623701 Sathington Willougby
Sathington Willougby's picture

Word to the wise, don't dump gargantuan trades on a market and you're set.  All this other bitching is loser talk.  Funny how it would show up on a blog founded by alleged insider trading perps.  ZH sold out to threetards (DNC and RNC).  Also funny how it has the same talking points as other such poli-engineering fiascos as OWS and Acorn (entitlements, hearsay, fallacies and populist blather).  Now we get the same carnies to cool off the marks so the twenty-somethings can parrot the dictatorship of the proletariat du jour.  

Cue the transaction tax for the BIG GOVT RELIGION TITHING  !!!

Fri, 04/04/2014 - 01:42 | 4623982 Blankenstein
Blankenstein's picture

 

Sathington Willoughby:

"Crybabies.  HFT got my wittle nest egg.  HFT is the boogerman.  HFT hurt my feelwings.


"Cue the transaction tax."  No - just throw the skimmers and front runners in jail.

Fri, 04/04/2014 - 03:59 | 4624079 Seer
Seer's picture

If you'd just stop after the first sentence then maybe people would start picking up your (valid) points.

BIG = FAIL  Not sure why people continually think that it's all going to continue to condense ala NWO.  That it's what POWER wants does not mean that that's what's going to happen.  POWER thinks it's "God."  Hubris eventually trips up...

"Cue the transaction tax for the BIG GOVT RELIGION TITHING  !!!"

Life takes its toll.  If one's aim is to minimize the toll then one ought to reconsider how one lives...

Thu, 04/03/2014 - 22:39 | 4623734 StupidEarthlings
StupidEarthlings's picture

Good thing they admitted it.. cuz we didnt really know for sure. 

 

Thu, 04/03/2014 - 23:09 | 4623782 IcarusOnFire
IcarusOnFire's picture

Lets cut through the chaff and get to the important stuff.  Does Michael Lewis own a nail gun?

Thu, 04/03/2014 - 23:33 | 4623826 ChargingHandle
ChargingHandle's picture

Uh duh. What a dirt dick. He came off as a complete condescending db. 

Fri, 04/04/2014 - 02:59 | 4624030 drunkenlout
drunkenlout's picture

If Mr. O'Brien had not defecated so aggressively on Mr. Katsuyama....   

Fri, 04/04/2014 - 00:03 | 4623869 dumbStruck
dumbStruck's picture

Maybe dis be wha the Banksta's bin snortin :

 

Oxytocin promotes group-serving dishonesty

http://www.pnas.org/content/early/2014/03/25/1400724111

Fri, 04/04/2014 - 00:27 | 4623913 Hellomoto
Hellomoto's picture

Scumbags

SOLD all my positions in BATS

Fri, 04/04/2014 - 00:27 | 4623914 Hellomoto
Hellomoto's picture

Scumbags

SOLD all my positions in BATS

Fri, 04/04/2014 - 01:02 | 4623946 RaceToTheBottom
RaceToTheBottom's picture

Where is the pool for the amount of time this bozo CEO holds his job?

Fri, 04/04/2014 - 01:06 | 4623951 chindit13
chindit13's picture

HFT might become a victim of its own success.  How many demons can fit on the head of a pin, or slip a bazillion phantom orders between the REAL bid and ask?

Out of curiosity I just looked at Getco's IS (they are now KCG).  They don't make the money they used to make.  If not for the acquired Knight's losses, profits at KCG would have been down.  (Maybe this explains why Virtu wants to do an IPO, so that owners can cash out quickly, before the market realizes the concept is dying via cannibalism.)

HFT seems to have generated peak income in 2009.  2013 seems to be about 20% of what it was just 4 years ago (though accurate numbers are hard to come by).

What's the next scam?

Fri, 04/04/2014 - 03:46 | 4624065 Seer
Seer's picture

"What's the next scam?"

Well, let's see... um... squirrel!

Fri, 04/04/2014 - 01:37 | 4623975 Schmuck Raker
Schmuck Raker's picture

Congrats again Tylers - sheer ZH gold...

"This leaves us with two possibilities, either:

1) The CEO of BATS has no idea what his firm actually does and is merely happy to earn an impressive amount of money skimming off the rest of the population of market traders no questions asked, or

 

2) The CEO of BATS is a liar and is merely happy to earn an impressive amount of money skimming off the rest of the population of market traders no questions asked."

Whores, the lot of them.

Fri, 04/04/2014 - 03:45 | 4624062 Seer
Seer's picture

Regarding selection #1: plausible deniability (compartmentalization - it's just a smart strategy)

As to selection #2: he's a PAID liar (GS was(is still?) paying him)

I don't think that anyone can say that competition isn't fierce.  The road will always lead to here.

"La Revolucion is like a great love affair. In the beginning, she is a goddess. A holy cause. But... every love affair has a terrible enemy: time. We see her as she is. La Revolucion is not a goddess but a whore. She was never pure, never saintly, never perfect."

- Jack Palance, as 'Jesus Raza', in, 'The Professionals' (1966)

IBEX strarts out as a goddess, and when competition (within the "new arena") starts heating up there it will, with time, be seen to be a whore.

Fri, 04/04/2014 - 06:58 | 4624191 headhunt
headhunt's picture

Seen as a goddess to those who are in the know - to everyone else just some c%$t sucking everyone dry.

Fri, 04/04/2014 - 02:28 | 4624015 The Onion Of Tw...
The Onion Of Twickenham's picture

"It's a racket. Those stock markets guys are crooked!". - Al Capone.

Fri, 04/04/2014 - 03:39 | 4624059 Seer
Seer's picture

He did not have sex with that computer!

Fri, 04/04/2014 - 05:07 | 4624128 jmcadg
jmcadg's picture

Let's move on from the worthless paper shit and talk about the REAL manipulation.

In 3...2...1.....................12,500,000...12,499,999...12,499,998...I'm waiting!

Fri, 04/04/2014 - 05:14 | 4624134 bardot63
bardot63's picture

Waiting for CNBC to comment on this.  Waiting......waiting....here it comes...no, still waiting.....

Fri, 04/04/2014 - 05:44 | 4624152 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

No, it really is a Schrodinger's CEO.

He is lying AND he does not know what he's talking about.

Welcome to Wall Street.

Fri, 04/04/2014 - 05:55 | 4624157 FredFlintstone
FredFlintstone's picture

Dollar Bill Hiccup... awesome screen name!

Fri, 04/04/2014 - 05:50 | 4624155 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Stealing is ok, as long as it's a little bit at a time, and as long as powerful peeps are making dough from it.

In fact, not just ok. It's a GOOD thing.

We're looking out for YOU little guy!

Moral relativism and fraud across the board, market's getting toppy.

Fri, 04/04/2014 - 05:57 | 4624159 FredFlintstone
FredFlintstone's picture

That's right, we won't really miss the money and they will put it to better use anyway.

Fri, 04/04/2014 - 06:52 | 4624187 headhunt
headhunt's picture

True Dat Fred.

That in a nutshell is the lefts entire philosophy!

They are smarter and deserve what they can steal.

Fri, 04/04/2014 - 07:22 | 4624215 Heffer
Heffer's picture

Maybe now I can get trickled on.

Fri, 04/04/2014 - 07:27 | 4624221 esum
esum's picture

TRUTH will bubble to the surface....

JUSTICE..... FUGGEDABOUT

Fri, 04/04/2014 - 07:39 | 4624237 DeficitAlchemist
DeficitAlchemist's picture

Till we get hard Jail time for swindling suits keep sacking the government of the day..

Fri, 04/04/2014 - 08:15 | 4624289 tuku2400
tuku2400's picture

The only way to win the lottery 100 percent of the time is to have the numbers beforehand

 

Fri, 04/04/2014 - 08:26 | 4624307 Last of the Mid...
Last of the Middle Class's picture

First of all there were only 3 people watching CNBC at the time and they were drooling in their oatmeal  and missed it. Secondly, another lying CEO probably with an (M)ay (B)reak (A)ny law from an ivy league school. What else is new? Drop QE and you'd have a 600 dow in 30 days, everyone knows this. You'd have to be an idiot to put your money in their money scam, shit just write them a check as a donation and forget it. Much less drama. The curtains have been pulled back a bit, temporarily, on the US money system and it's not pretty. Pass the Popcorn.

Fri, 04/04/2014 - 08:57 | 4624431 LawsofPhysics
LawsofPhysics's picture

Another useless paper-pusher lied?  < shocker >

 

Fri, 04/04/2014 - 09:10 | 4624468 RabbitOne
RabbitOne's picture

I am amazed at the length of these discussions? The HFT issue is settled! The royal HFT gang has paid millions in tribute to King Obalmzee Whamzee of Kenya (that is ken ‘ya pay more for protection) and nothing is going to happen by royal decree!! 

Fri, 04/04/2014 - 09:26 | 4624500 tradingdaze
tradingdaze's picture

Well I emailed BATS and following is their return email. Apparently they are "MAKING MARKETS BETTER". ha ha ha

/////////////////////////////////////////// Mr. Lawson, thank you for taking the time to write. We appreciate all feedback we get - positive or negative. Bill would be the first to admit that he didn't put his best foot forward in the interview and I understand your frustration.  I can promise you that we're a good company full of hardworking people. And that Bill is a terrific leader. I hope you give Bill - and our firm - the opportunity to redeem ourselves. 

 

Feel free to reach out anytime with questions about BATS or the market in general.  Thank you, again for taking time to write. Have a great evening.  Cheers, Randy Williams SVP, IR & Comms w- 212.378.8522 m- 816.516.2179 BATS...Making Markets Better

Follow us on Twitter at @BATSGlobal 

///////////////////////////////////////////////////////////////////////////////

Fri, 04/04/2014 - 09:35 | 4624530 rsnoble
rsnoble's picture

The new-age circus.  

Fri, 04/04/2014 - 09:39 | 4624558 agstacks
agstacks's picture

Let's go ZH, light this guy's twitter feed up!  These people just need to be exposed..

Fri, 04/04/2014 - 09:41 | 4624568 hotrod
hotrod's picture

Seems like a similar issue the mutual fund industry allowed up to yr. 2000 was HFT for their company funds for certain traders that deposited large amounts of money in firms funds.  Class Actions were held and the Companys such as Franklin, Fidelity etc institued trading  restrictions to prevent the dillution of NAV of fund share holders due to trader daily arbitraging the open and close of funds.

Looks to me like information is being provided to certain traders that allow them to profit at the loss of others. 

Fri, 04/04/2014 - 09:45 | 4624589 orangedrinkandchips
orangedrinkandchips's picture

Anyone in BATS, with a vested interest in teh fucking company...NEEDS TO FIRE HIS ASS ASAP.

 

JERRY SPRINGER. That is what that was!! Defensive 3rd grader. 

 

TYLER....IT WAS PRICELESS!

Fri, 04/04/2014 - 09:47 | 4624600 Gadfly
Gadfly's picture

Lies, lies, and more lies.

Fri, 04/04/2014 - 11:05 | 4624878 homiegot
homiegot's picture

That BATS guy is a POS.

Fri, 04/04/2014 - 20:27 | 4625025 haskelslocal
haskelslocal's picture

chowbocka hit the windshield

Fri, 04/04/2014 - 11:52 | 4625039 Pike Bishop
Pike Bishop's picture

The only good thing about arrogant bullies is when they fuck-up, it's usually big and a loud explosion.

Yesterday, I heard O'Brien not only say it, but repeat it.

The truth doesn't matter to these elitist asshats. They are truthy while trying to look like an authority,.. an arrogant condescending one in O'Brien's case. He was clearly trying to intimidate.

This is the idiot mentality of most of the financial porn. If some oligarch says it is true, well then it must be true. It's an amazing pathology, because they think they can create any reality which suits them and their stakeholders.

Because they are getting virtually ground up in the public discussion, I expect them to go to the ever ready Plan B.

Plan B = "Oh, it's all much too complicated to make sweeping statements. Let me explain how it works.."

Fuck you. The fundamental way it works doesn't take a membership in Mensa, or even the local Moose Club.

HFTs and Big House HFT units net-pay the Exchanges to get the orders flashed, then speed ahead to abuse them.

Or are the torrents of quote stuffing and canceled orders just a random accident.

Don't let those weasels get off-topic. At it's foundation the deal is rigged, no matter how they want to spin it.

They are finally caught red-handed and public. Their only defense is the 'believe me, or you're lyin' damned eyes?"

That only works on co-dependent, brutalized, women/victims.

Don't be a co-dependent victim.

Fri, 04/04/2014 - 12:15 | 4625131 Puncher75
Puncher75's picture

I really love how these guys think they can reverse themselves on a blatent lie after being caught in it, and then suddenly, since they reverse themselves, everything is OK. YOU WERE CAUGHT LYING AND SKIMMING.  THAT MAKES YOU A LIAR AND A THEIF! Questions?

Fri, 04/04/2014 - 12:25 | 4625171 NoTTD
NoTTD's picture

This whole thing is BATShit  crazy.

 

(Yes, I know someone probably thought of this already.  What do you expect me to do?  Read 300+ comments?  Fuck that BATShit.)

Fri, 04/04/2014 - 13:05 | 4625364 MyBrothersKeeper
MyBrothersKeeper's picture

Obrien must have gone to the same liar liar school as politicians....when all else fails paint your opposition as crazy and yourself as the victim...and the more voiceiferous you say it, the more people will believe that it is true. At least in their minds.

As I said in a different post, I see this happening every day (frontrunning and skimming).   What you don't hear about enough is the squeeze put on smaller volumn stocks by false orders to trigger, over time, algo based selloffs and trader compelled selloffs because investors get nervous that something must "really seriously" be wrong with a stock (thus forced selling) to have it drop to a level. But in reality much of the movement is based on manipulation....which only ends with real news or a decision by the maipulators to stop driving the stock down so they can start buying it at a level with very minimal risk. AKA they know when to buy at the leveling off point because they control it by stopping the false order manipulation.

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