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HFT Firms At Long Last Subpoenaed

Tyler Durden's picture




 

And they thought they would get away with it... Over a year after HFT firms succeeded in crashing the stock market following an unprecedented spike in churn which eliminated all market liquidity in non-rebate providing stocks, followed by an across the board HFT STOP move which sent the Dow down 1000 points literally in seconds, the same HFT parasites that do nothing to provide liquidity but merely collect rebates in a low price, few high volume stocks as Zero Hedge has been warning since the summer of 2009, are finally getting the regulators to act and not to pull an Obama and blame it all on Waddell and Reed. Reuters reports: "The U.S. securities regulator has sent subpoenas to high-frequency trading firms in relation to last year's "flash crash" probe, the Wall Street Journal reported, citing people familiar with the matter. The Securities and Exchange Commission (SEC) is also examining whether these firms further exacerbated the panic on May 6, 2010, when U.S. stock markets suffered a record fall within minutes, the Journal said. Some of the subpoenas have been sent since the start of the summer, the people told the Journal. The paper did not name the firms involved. [coughgetcocough] It is not known whether the subpoenas will result in any enforcement actions, the paper said. A subpoena does not necessarily reflect a suspicion of wrongdoing." Well, it is known that no enforcement actions will result if the SEC wants to retain its invisible low volume melt up bid which has pushed the market ever higher on 98% of the trading days in the past 2.5 years. If however, the SEC is willing to pull and S&P and finally do the right now, then all the 19 year olf math wizards who control 70% of the S&P churn should be worried. Very worried. As should all the momos whose only strategy for the past two years been BTFD.

Ah the horror: to think that the alternative of HFT is having to learn such arcan concepts as "fundamentals" and relative value.

 

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Mon, 08/08/2011 - 07:20 | 1536308 EscapeKey
EscapeKey's picture

They will certainly learn from their eventual harsh $10,000 fines.

Mon, 08/08/2011 - 07:27 | 1536326 oogs66
oogs66's picture

and those agreements that "we neither admit nor confirm any wrongdoing"  blah blah blah...

 

though since these are geeks rather than schmoozers, maybe they will get nailed

Mon, 08/08/2011 - 08:08 | 1536391 Popo
Popo's picture

Naughty, naughty HFT'ers!    Now give us $1000 and get back to work, youuuu silly nillies.

 

 

Mon, 08/08/2011 - 08:32 | 1536436 topcallingtroll
topcallingtroll's picture

time for rope and hangings.

The enforcement division of the government is too busy chasing amish guys selling unpastuerized milk to willing customers.  Get the rope.  Let's go!

Mon, 08/08/2011 - 07:23 | 1536320 doomandbloom
doomandbloom's picture

its not 'trading'...its stealing using computer programs

Mon, 08/08/2011 - 07:28 | 1536328 KowPie
KowPie's picture

No doubt. They had to work all of .0000125 seconds to earn the (most likely) fine amount. The SEC isn't even a toothless tiger, it's more like a toothless gerbil.

Mon, 08/08/2011 - 07:29 | 1536330 SOLnow
SOLnow's picture

Markets going up..leave the algo's alone.  Markets on verge of collapse...must stop the algo's. 

Mon, 08/08/2011 - 07:35 | 1536341 buzzsaw99
buzzsaw99's picture

+1

Mon, 08/08/2011 - 07:30 | 1536331 belogical
belogical's picture

Don't get to excited Tyler, they investigate, find crimes worth billions and fine $250 for not passing go

Mon, 08/08/2011 - 07:31 | 1536334 oogs66
oogs66's picture

how long would it take for the SEC to impose a rule making pennies the smallest denomination a stock can trade in?  Seems fair and if HFT's can't live with penny markets, screw them

Mon, 08/08/2011 - 10:23 | 1536951 you enjoy myself
you enjoy myself's picture

that's what i don't get.  if its trading under a penny, sure, but what legimate reason is there for sub-penny spreads otherwise?  this would get rid of rebate churning almost entirely.

Mon, 08/08/2011 - 07:36 | 1536342 papaswamp
papaswamp's picture

Wait they told us it was W&R.....was this not true?

Mon, 08/08/2011 - 07:36 | 1536343 Die Weiße Rose
Die Weiße Rose's picture

why Tyler, I am truly surprised at your confidence in that so-called Regulator !

 I thought everyone knew that the SEC was in on all that HFT and blatant market manipulation.

Everytime the markets tank, the SEC make a little noise, then go back to sleep again.

Fuck the SEC, they do shit!

 

Mon, 08/08/2011 - 07:37 | 1536345 buzzsaw99
buzzsaw99's picture

HFTs provide liquidity. :snark:

Mon, 08/08/2011 - 07:40 | 1536350 KowPie
KowPie's picture

I'm no trader by the stretch of anyones imagination. In fact, most likely everyone here could run circles around me technically without breaking a sweat. That's what I actually like about this site. I've learned a bit over time, some things have clarified.

When it is a computer generated program that skins the cat being thrown in the air and again as it falls back to earth over and over in micro seconds that doesn't seem to involve much intellect (other than the thought process in developing and writing said program) after the initial base work. I liken it to a laser carved rifle stock (higly skilled programmer develops necessary parameters to achieve desired end results) versus a hand carved rifle stock (highly skilled artisan develps skills over a lifetime of devotion). To the untrained eye they look the same. Put them in front of me and I can tell you which is which 10 times out of 10.

And if the grid goes to shit, or if a massive natural disaster strikes, etc. etc. the hand carver can contnue to work unlike the automated laser carving bank.

Mon, 08/08/2011 - 07:44 | 1536354 ZeroPower
ZeroPower's picture

This is potentially good as HFT has been shown to distort, but some of you guys posting have to quit with the whole 'big regulation + big gov = excellent' theme cause its annoying and clearly HASNT worked.

Mon, 08/08/2011 - 07:52 | 1536364 StychoKiller
StychoKiller's picture

Peter Cook as Beelzebub in "Bedazzled":  "Lousy Sins I got working for me -- must be the wages."

Mon, 08/08/2011 - 07:53 | 1536369 RiverRoad
RiverRoad's picture

Suddenly they got religion?  Sophie's Choice for the SEC:  kill the HFT's or kill the market. 

Mon, 08/08/2011 - 07:56 | 1536374 Mad Mad Woman
Mad Mad Woman's picture

Kind of a little late for that isn't it? That's our govmint in inaction. It's all for show anyway. Nothing to see here, move along.......

 

Mon, 08/08/2011 - 07:58 | 1536376 mtomato2
mtomato2's picture

coughgetcocough

 

I love you, Zero Hedge.

By the way, seems your servers are being, understandably, overloaded more and more by the second.  Here's a thought:  Do a web-a-thon.  For about an hour.  Get some dough out of us bottom-feeding users.

I am jobless, and probably close to homeless, but I WILL find ten dollars to send you for your valuable, irreplaceable, bold and brave services.  I've been a leach for far too long.

It's the least I can do.  And never let it be said I didn't do the least I could do.

Mon, 08/08/2011 - 08:35 | 1536443 topcallingtroll
topcallingtroll's picture

every dollar helps.  zero hedge does not suck off the government teat like NPR and "educational" TV.

 

Please donate.  Even five dollars, ten dollars.  Whatever you can.  It is all greatly appreciated.  keep this going.

Mon, 08/08/2011 - 08:17 | 1536406 fishface
fishface's picture

wouldn't it be more effective if the stock exchanges had some kind of filter or time delay in their software to disallow this practise?

Mon, 08/08/2011 - 09:59 | 1536437 baby_BLYTHE
baby_BLYTHE's picture

A 1% Wallstreet sales tax on CDSs, CDOs, MBSs and other toxic derivatives is a good place to start. Only so the tax is felt by the big banks, billionaires, hedge fund hyenas not the J6P investor though

Mon, 08/08/2011 - 08:29 | 1536431 topcallingtroll
topcallingtroll's picture

the real issue is the HFT frontrunning and hundreds per second canceled trades throughout the trading range to find out where the limit orders are.

 

Why won't the government do something about blatant illegality?  I have lost my faith in government.  It is every man for himself now.  Screw them all.  I am going to cheat even harder on my taxes.

Mon, 08/08/2011 - 09:05 | 1536507 williambanzai7
williambanzai7's picture

Is it true Waddell moved to Chile?

Wed, 09/14/2011 - 05:07 | 1667504 chinawholesaler
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