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Australia Regulator Furious As Central Bank Decision Leaked To HFTs For Third Time
For the third month in a row, FX 'traders' in AUD "guessed" the Reserve Bank of Australia's decision in the milliseconds before it was released to the public. Aussie regulators, seemingly furious at the blatant-ness of the front-running, confirmed they will be investigating the price spike overnight. As we noted last month, the rigged-ness of the markets was so clear as to suggest the decision was clearly leaked ahead of the public release as AUD spiked 70 pips on heavy volume in the 7 seconds before 230pm local time release. As ABC reports, concerns about whether some may be getting advanced notice of the central bank's impending decisions led RBA Governor Glenn Stevens to note his own concerns "about reports that there had been extraordinary trades before the release of the Reserve Bank decision yesterday." Will we see consequences this time?
It is the third straight month that money traders appear to have correctly guessed the RBA's next move.
"ASIC confirms it will investigate a spike in the Australian dollar shortly before the Reserve Bank's monetary policy decision today," ASIC said in a statement released late this afternoon.
"The investigation will look at trading in the dollar prior to the RBA's interest rate decision statement at 2.30pm (AEST)."
Most economists had correctly predicted that the RBA would keep rates on hold at 2.25 per cent at today's board meeting.
But many currency traders had expected a follow-up to February's rate cut, and as a result the Australian dollar climbed more than 1 per cent against the greenback after the on-hold decision was announced.
That rapid rise would have meant trades made even a few seconds earlier could have delivered a huge windfall.
Last month's suspicious trading took place around 45 seconds before the RBA's decision was posted.
Today's trading appears to have been much closer to when the decision was released, with the dollar's rise appearing to begin five seconds early.
The cases have raised concerns about whether some may be getting advanced notice of the central bank's impending decisions.
...
In March Treasurer Joe Hockey said he had spoken with RBA Governor Glenn Stevens about the currency trading.
"Obviously I was, like he was, concerned about reports that there had been extraordinary trades before the release of the Reserve Bank decision yesterday," he said at the time.
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We won't hold our breath for any scapegoats... Just ask Timmy G how his 'front-running' worked out? The 'leak' serves two purposes - 1) confirms the narrative the RBA wants to spin, and 2) adds moar money to bank coffers as bad loans are rising. The internal investigation, we are almost sure, will turn up nothing but an illiquid market that swng violently on a good guess by a few traders... sure, whatever.
Charts: Bloomberg
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You want a cop?
Go to a Dunkin Donuts.
we insider traded some folks
Let me correct that headline for you ZH ...
Australia Regulator And Their Central Bank Partners Furious That They Were Discovered Leaking Secrets To HFTs for a Third Time
Casablanca; round up the usual suspects
The regulators will take a cue from Obama,
"We will get to the bottom of this"
Money for nothing and the chicks for free.
ohhh ...they're "furious! My, My Big fucking deal. It's been happening all over the place. Big fat Wall Street bankers get rich off us little shits. It's all Bullshit!!!
"Not a smidgen of corruption" - Barack Milhouse Oblamo
Halt Trading -+ a random number of minutes from the announcement. Problem solved.
If someone can figure out how to do backwards causation (aka getting a photon to send information to us from the future) we can end all the lotteries all the stock markets etc forever as it will become impossible to trade as future price will be known instantly.
Which IS the final solution in my book, as in reality the stock market should not even exist. Get rid of it and run on bonds only.
Everyone knows the "solution" is a stern finger waving at the responsible party with strong rheotoric about next time this happens.. /sarcasm.
Where is the sarcasm?
Is a "leak" the only option?
It is my belief that HFT's have insiders at every communication company on the planet. Just because the trade came 45 seconds before doesn't mean the leak was 45 seconds early. They may have know the day before, but too much can happen in a day.....so they just don't push the button until they're under 60 seconds.
Remember...if the NSA has access to all forms of communication, then SO DO THE HFTs.
Plus you get to count backwards from a hunderd.
It isn't this simple.
This time around there was a lot more consensus that monetary policy wasn't working and that was the part was that clearly leaked. Even the newspapers were reporting about it. The funny thing is that the traders didn't pick up on it until the last minute.
During the shock interest rate cut, it was posted all over the newspaper sites hours before it happened. So I guess some journalist is involved. This time around, nothing, except an article that monetary policy wasn't enough. This article gave the implication that monetary policy was a useless blunt tool and hinted at RBA inaction.
I don't think the RBA will move this year. They have this prudent style that is different to the United States and it has always been like this. Just take a look at the past and you will understand.
In the future I guess the market will have to set rates independent of the RBA's cash rate. I believe a lot of the online banks in Australia like UBank/NAB have already proactively reduced their deposit rates even though the official cash rate has stayed the same. To be honest, it actually feels like that's what is happening in the present.
"monetary policy wasn't working"
No one is going to make a massive bet on that BS.
Not just that.
There is a lot of junk in the media lately.
People are jumping the gun on this. It's like Scot's college's buy your way into University diploma. In fact you would realise that the STAT test already gives this pathway to students... You don't need a HSC mark to get into university, it has always been like this. The Scot's diploma was only recommended to those who had previously failed to gain entry via the HSC... Go Figure! The politicians and regulators are just stirring up trouble lately. I wonder what they are trying to hide and push through legislatively.
You need to look at the environment as a whole and literally be down on the ground in the country which are you are analysing.
But it wouldn't jack up at the last second like that. It would be a gradual move if it was some sort of "realization".
Yeah, there is a possibility of an insider which is most likely someone who is also leaking to the media because the two sets of information seem to always be riduculously accurate and in consensus regardless of what the cash rate futures are stating.
This is why I don't recommend betting using the cash rate futures, but sadly a few mugs still trust it...
The media should do flash announcements. Posting headlines on their webpages for 10 milliseconds (FOMC increases target rate 200 Basis Points!!) ....few humans would ever 'click' at the right time to see it...but the algo's will pick it up. It could be like subliminal algo tripwires.
They need to stop bringing IPads and Cell Phones into meetings. Haven't they figured out it's a party line yet?
OK, here's what's going to happen......now dammit.....keep it a secret this time.
At the heart of it has to be some good ol' fashioned skullduggery, e.g. raiding someone's printer, or an inside informant, say, the girl who puts together the powerpoint, etc. Or maybe a hacked computer.
NSA has to make payroll and they can frontrun virtually any financial act recorded on a US made computer. Or the ones who do them favors can...
Anyone who works with HFT, how do you clear your trades? I know what is supposed to happen and how it works at other places, stuff like Oasys, Tradesuite, ect. I can't visualize the system a small HFT shop would use to clear the volume of trades they doing. How are you actually conducting the behind the scenes clearing and broker communications? It seems like you would be buried especially with all the human factors involved in the process that can cause mistakes and delays. Is there an entirely different system for HFT than normal investment shops use?
It's called the B3 system: "Bippity Boppity Boo". It only works on Windows ME.
Another day in the fraudulant, rigged "markets".
It would almost seem that the Central Banks are a network of above the law criminals.
Isn't the Australian government considering a "deposit" tax?
That's right, keep fucking the prudent savers over, and rewarding the borrowers living beyond their means, because they are pumping the epic housing bubble that keeps the government narrative that renting is bad going.
What an inversion of capitalism, where bad risk gets rewarded and prudence gets punished.
Central banksters and their shysters in government deserve to be hanging off lamp posts for skewing the incentive structure heavily towards the plutocracy and borrowers.
I've got nothing to complain about.
I was on the right side of the spike.
It's a shame trading isn't this easy every day.
As usual......pictures or it didn't happen.
It's a 'Mulligan'.
Mulligans make me feel so gay.
Pulling your balls out of a bush makes you feel ghey?
The only way to find out 100% is to pull a Trading Places with them. Put out the wrong report, see if there is a leaker, then announce the correct report and see what happens in the seconds before. Of course they will need a drunk, a black guy and a prostitute to pull it off.
Yeah right, sure he didn't know. He was in on buying the shit. Perhaps him and a few others making a suspicious multi-million trade just before would be cue? All I know is that you can't trust anyone anymore, and that's a big problem.
No, you can trust them, and that's an even bigger problem.
No way people are cheating, no f'in way.
"Madam, I run a house of discipline.
The [traders] will be disciplined and disciplined severely.
Good day."
Nice guess haha
And the Central bank thinks they may cut the bidding for their insider information by the other players? Whats a second, or five, between friends?
I dont know why ASIC would even bother investigating when they could just email the know-alls who run Zerohedge, and ask them.
just waite until the HFT's front run the comments section, yikes.