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"What’s Going On" - Traders Stumped As HFTs Frontrun Last Night's Australia "Surprise" Rate Decision
Yesterday at 10:30pm eastern, or alternatively today at 2:30pm local time, Australia's central bank unexpectedly did not cut its key interest rate, keeping it at 2.25% even as the majority of economists had predicted a rate cut. However, not everyone was surprised. Just a minute before the official announcement at bottom of the hour sharp, the AUD surged by 0.6%, rising from 0.7774 to 0.7822, suggesting that at least one algo and likely more, had advance knowledge of the unchanged decision, as shown in the chart below.
As BBG further reports: “The Australian dollar was curiously bid going into the
today’s announcement, having traded as high as 78.23 cents,”
Robert Rennie, head of currency and commodity strategy in Sydney
at Westpac Banking Corp., wrote in a note to clients.
Was this a leak, or a strategically placed, and correct, HFT momentum ignition burst just ahead of the RBA announcement? If indeed this was a lucky guess, it would be the second time in a row HFTs have correctly predicted the "surprise" move by the RBA:
It was the second time in two months the RBA had surprised forecasters and also the second time the currency moved in the right direction in advance of the central bank. On Feb. 3, the Aussie dropped 0.6 percent to 77.49 cents in the 10 seconds before the RBA decision was released. It fell to a 5 1/2-year low of 76.26 after the rate-cut announcement.
Nothing new here, and merely a rehash of what has been said here since 2009: "The increase in the use of high-frequency trading has spurred concern that algorithm-driven orders can lead to distortions for stock, bond and equity markets around major data releases."
Still, some were surprised that the market is either rigged, or selected leaks continue to favor a specific group of traders:
“We were sitting here, the Aussie just jumped and we’re wondering what’s going on,” Annette Beacher, head of Asia-Pacific research at TD Securities Inc. in Singapore, said by phone after Tuesday’s decision. “We were watching that very closely. There were market rumors that the website was updated a little early.”
For its part, the RBA denied speculation it had leaked the report early: "The RBA published its statement at the scheduled time, a spokesperson for the central bank said, asking not to be identified as per standard practice for the organization. The RBA declined to comment on whether the matter was being investigated."
Australia's SEC has promised it will investigate: “ASIC cannot comment specifically, however as you may expect we would review any unusual trading as part of our routine monitoring and surveillance activities,” Sydney-based ASIC spokeswoman Miriam Phillips said by phone on Tuesday.
But it won't, because in the "new paranormal" where occurences such as this one are now a daily fixture, any inquiry into just how broken the market is will lead to some truly dramatic revelations, and since stocks are at all time highs, HFTs are for now merely facilitating the central bankers' job, which over the past 7 years has been a very clear one: reflate the biggest asset bubble of all time. Of course, following the crash, everyone will blame the HFTs who will be a conveient scapegoat for everything that is wrong with the "market", but for now it's smooth sailing ahead.
It was also unclear if any HFT manipulation in the AUD was connected to a dramatic move in gold just ahead of the announcement, when gold tumbled then promptly rebound as the following chart by Nanex shows.
This particular gyration in the asset most hated by central bankers everywhere will certainly not be investigated by anyone in regulatory authority, anywhere.
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They're just adding liquidity
Simple temporal physics. Being in close proximity to a vortex of evil causes temporal deformations which allow traders access to near term future events. Why else do you think Goldman has a permanent office reserved for the devil, do you think they like the smell of sulphur? The closer you get the farther into the future you can see but only upper management has the stomach to get close enough to peer more than a few minutes ahead. Even Blankfein can only see a few months forward.
If only we had people that were suppose to look into things like this...
It's one big club and you're not in it - GC
I mean...how is anyone surprised by this after 6 years?!?!?!?!
What blows my mind is why wait 1 min!?! Atleast two mins right? It just goes to show there is absolutely no fear of getting caught. Which leads me to the next assumption, this was an inside job.
Why arnt the citizens pissed off? Well, try to tell joe the plumber that the aussie was scalped for 150 pips a min before a rate increase decision. The look on his face will be priceless.
And Corzine has yet to stand in front of a judge, so let the games go on...
I sleep well at night knowing that at least SOMEBODY is in charge. Could you imagine the carnage if we actually had free and fair market-based pricing? It would be a disaster.
Grandpa can you tell us the story of that time when you worked in open outcry pits? Tommy doesnt believe me!
Round up the usual suspects......
all rigged, normal.
what?! you mean somebody is cheating!?! no way!!
There is no way, that someone in IT could have intercepted the print job then made a phone call...there's just no way that would happen. First of all, all IT people exemplify moral superiority. But secondly, all the third party vendors that have very extended access to our "systems" to "support" us....even Microsoft, Oracle, Cisco.....We are sure, that no one at any of those organizations would ever use their access for personal gain...even if they were offered a new home or a yacht by the HFTs or Goldman third party contacts.
All of these fucking charts are nothing more than results from a polygraph. Fucking disgusting criminal Mother Fuckers.......of course none of this is admissible in court.
Whoever it is, it can not be the Squid. They are too busy doing God's work.
i see no issue. GS gave the RBA the decision right on cue at 2:30.
Australia's SEC has promised it will investigate...
Everything is allRIGGht, move a long
conclusion: in future central bankers will have to wear tin foil hats to prevent bots to read their intentions /s
in order to discern a central banker from conspiracy theorists, the foil hats will have to be made out of gold foil
next: how to discern a crack economist from a loonie: watch the pipe
Are you suggesting that there is a market for true price discovery?
Allow me to clarify. All traders are equal, it's just that some traders are "more equal" than others.
There should be a label on every fund prospectus from now on:
WARNING FROM THE SECURITIES AND EXCHANGE COMMISSIONER: Research has shown that HFT is like a cancer in the markets which can cause injury or death to your 401k or investment portfolio.
P.S. Smoke em if ya got em.
Insider trading is not illegal in the currency market, so whats the problem?
Australian Bureau of Statistics' employee Christopher Hill refused bail, extradited to Melbourne
http://www.theguardian.com/world/2014/may/10/second-man-in-court-on-7m-i...
I hope the RBA sprinters are smart enough not to select Australian FX market makers for the trade liquidity... these guys stood out like Gina Rhinehardt at the Ms Bondi Bikini paegent
and if you are going to live the Aussie dream... don't buy a multi million dollar apartment off a reality TV renovation show... its like calling your child Mercedes
Still, it was better than this effort, beause the ASIC grey vinyl shoe crew were definately on the Market Integity charter:
http://www.afr.com/p/national/the_temptation_and_then_the_torture_6AiaQj...
But it really doesnt pay to talk to the Narcs... it isnt't game theory... lawyer up and 'no fuckin comment'
Great Heavens to Murgatroyds! No CB would ever leak info prior to officially announcing it...that would be unethical, dishonest and not to mention, against the law.
Of course they are going to vehemently deny any wrongdoing and no, they are not going to start an investigation.
you're reading way too much into this.... i've traded long before all this HFT and I've seen moves like this, more dramatic going back to 2000-2001....
so all you are saying is thast there were leaks back in 2000...? I have been trading longer than that... and there were not really that kind of front running.. reason = voice market allows everybody to kind of know who is front running. Digitally... it is harder to know... but eventually there wouyld be proof.
'move along now, move along, nothing to see here.
No one is willing to take justice into their own hands (no one who understands this stuff anyway) and they know it, so they do this stuff with impunity.
From the Smashing Pumpkins
The world is a vampire, sent to drain
Secret destroyers, hold you up to the flames
And what do I get, for my pain?
Betrayed desires, and a piece of the game..........
Despite all my rage I am still just a rat in a cage
Despite all my rage I am still just a rat in a cage
Then someone will say what is lost can never be saved
Despite all my rage I am still just a rat in a cage
Screaming Jets - C'mon
C'mon ... let me show you how to do it.
https://www.youtube.com/watch?v=QoowWBOW0BM
Your link does not work in my country apparently.
I'd be quite interested to see how many times HFT front running has been wrong. Statistically I'd think one would expect a normal distribution with roughly half wins half losses. If HFTs were regularly making large moves with an irrational winning percentage then Shirley someone would be forced to look in to it. Shirley.
Boy our elite overlords have the coolest financial and play toys.
VIRTU
Aussies are always quick. They announced the Killing of JFK before he was even murdered. Also the first Coke bottle on the moon was spotted from Aussie land.
Australian Bureau of Statistics' employee Christopher Hill refused bail, extradited to Melbourne
http://www.theguardian.com/world/2014/may/10/second-man-in-court-on-7m-i...
I hope the RBA sprinters are smart enough not to select Australian FX market makers for the trade liquidity... these guys stood out like Gina Rhinehardt at the Ms Bondi Bikini paegent
and if you are going to live the Aussie dream... don't buy a multi million dollar apartment off a reality TV renovation show... its like calling your child Mercedes
Still, it was better than this effort, beause the ASIC grey vinyl side zipper shoe crew were definately on the Market Integity charter:
http://www.afr.com/p/national/the_temptation_and_then_the_torture_6AiaQj...
But it really doesnt pay to talk to the Narcs... it isnt't game theory... lawyer up and 'no fuckin comment'
If you are surprised by market front running, then it is clear you did not get the memo:
The Crossing Point
https://www.youtube.com/watch?v=-_-kMVwJaDA