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Letter To Mary Schapiro Demanding An Explanation For Millions Of Stub Quote Rule Violations
Dear Mrs. Schapiro,
We would like to thank the SEC for implementing the Stub Quote Rule in December of 2010. While stub quoting did not cause the Flash Crash of May 6th 2010, it was a contributing factor and we welcome the stub quote ban.
However, after studying four recent trading days, we have a question. Is there any intention of enforcing the stub quote rule? If so, can you please tell us when?
The SEC document states:
- For securities in the S&P 500 or Russell 1000 indexes, market makers must enter quotes that are not more than 9.5% away from the NBBO. During the first 15 and last 25 minutes of trading, entered quotes must be no further than 21.5% away from the NBBO. For all other exchange-listed equities, it's 31.5%*.
* note: The quote is allowed to "drift" an additional 1.5%.away from the BBO bands -- so 8% becomes 9.5%, 20% becomes 21.5% and 30% becomes 31.5%.
We processed all quotes for each of the last 4 days (we have some experience with this), and printed out the time, symbol, and offending quote that was outside a generous 32% band. Here are the results (note how often a bid is at a penny!):
- 08/05/2010 - 1,220,280 stub quotes.
- 08/08/2010 - 1,342,276 stub quotes.
- 08/09/2010 - 1,610,744 stub quotes.
- 08/10/2010 - 1,147,606 stub quotes.
Because a picture can be worth a thousand words (or a text file with over a million stub quotes), we present you with four random images of stub quoting in 2011:
- 05/11/2011 - RJL Lodging Trust
On 05/11/2011 the stock RLJ began it's first day of trading (an IPO). The first trade was at $17.25 followed by a series of trades at $0.0001 before resuming at $17.07. - 05/13/2011 - Enstar Group
On 05/13/2011 the stock ESGR opened at $102.00 and quickly fell to $0.01. - 08/05/2011 - SPDR Barclays Capital Conver
Chart showing typical stub quoting well below the stub quote banding rules. Note the price activity that follows. - 08/08/2011 - Direxion Mid-Cap-Bull
Another typical example of stub quoting we see on a daily basis.
We have presented a mere handful of examples. Should you desire more data, we have a mountain of it.
Finally, given the simplicity of the stub quote rule, we would like to ask what mechanisms the SEC will have in place to enforce the ever more complex Limit Up/Limit Down rule.
Thank you for your time.
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Has about the same chance of being enforced as Obama does of actually telling the truth about something.
You mean... Obama Bin Lyin' ???
I hired a mind reader to see what conversations were going on in Mary Shapiro's head. The mind reader said she was pretty irate and thought Zero Hedge should just go and fuck itself. Just kidding about the mind reader. It doesn't take a mind reader to know that people hate it when you yank their chain. Shapiro has to answer to someone, just not her conscience.
Chicks. Whaddya gonna do?
Maybe somebody should go buy her a nice new hat or somethin
SEC to Tyler:
Shut up. You're ruining a good porno... "Mary Does Mainstreet".
Women suffer from pornography addiction, too.
We own the SEC say the oligarchy. Only when we rise up again the evil will things change.
Inigo Montoya: She keeps using those words. I do not think it means what she think it means.
You're addressing criminals who are happy to see the populous raped daily for the benefit of their masters, why be so nice? Should have start the letter 'Dear scum'.
Sorry, i can't take this pandering seriously.
"populace"
They aren't really criminals, it's the algos. Sometimes robots can be misguided but it's simple problem to correct. http://www.youtube.com/watch?v=9l7Fxp9gMs4&feature=related
+1 great find!
Old Glory Insurance, best of breed solution.
http://www.hulu.com/watch/2340/saturday-night-live-old-glory
In order to form a better market. Let's tax each tick, trade, stub, option, or anything that is executed, cancelled or not, a buck a tick. Hmmmm
The limit up/limit down rule for gold and silver: Limit it up, no limit down.
dear nanex
thank you for your concern we would like to advise you, to go fuck off
thank you
management
...or call us at 1-800-eat-shit
How can you sleep at night? No heart no soul, no cojones.
You must resign if you have any self respect or "amour propre".
The words "Mary Schapir" "SEC" and "enforce" could probably never be used truthfully in a sentence except as an ironic joke.
pick the correct answer and win a chance to be strip searched and investigated:
a) thanks for the letter, we're already aware of this, so fuck-off
b) as you well know, our budget has been cut so the concept of enforcing the law is silly, so fuck-off
c) none of the above (silence - no response - so fuck-off)
Mary Schapiro's BEST anagram:
PRIMARY CHAOS
We are busy harrassing the S&P at the moment. We are forwarding your contact information to the Dept. of Reichland Insecurity and the FBI for further investigation.
"Dept. of Reichland Insecurity"
Nice. Will drop that in conversations from now on.
This letter is not a waste of time. One must ask for enforcement and then clearly show why enforcement is required in order to put the SEC on notice.
When hanging time comes there needs to be charges ready to be brought to the people's court.
Yes, but you should also send a letter such as this to multiple mainstream media outlets. Multiple so that there's greater chance of someone not knowing the company's standards and actually writing about this. And multiple so that you can combine the remote chance of someone at, say, the ny times having a pang of conscience with their competitive feelings toward other media outlets.
freddie! c'mon!
we don't need no stinkin mainstream media badges on freaking fight club! they can visit us if they want to know the s-c-0-r-e
Enforcement? Dude, you have no idea what happened in those trades. How do you even know there's anything to enforce?
You do reailize that most likely those were either errors from a glitch in the quoting engine or, much more likely, were erroneous prints? That is, no trades occurred at those prices, but they were printed on the tape because of a glitch at the exchange.
And his complaints about quoting are interesting. I doubt very much that he has access to the information necessary to detremine what bands people were quoting in.
The wide quotes he thinks he saw were either not Russell or S&P stocks (the band for those is 30% away from the NBBO) or they were customer and not MM quotes.
Timber Hill, SIG, Goldman and slew of other firms have already gotten out of the business. There are almost no stock market makers left. There's no reason to be a stock market maker anymore.
Forget the tape, nobody is questioning if it is valid or not. It is the stub quotes that are subject to enforcement, not the trades.
First of all, I like your avatar.
Second, stub quotes are not banned. You can have them as long as you also comply with the thighter band.
Third, only market makers are required to comply with the band. As a customer, you can stub quote all day long and the SEC can do nothing about it. I don't think this person can differentiate a market maker from a customer.
Finally, the bands for non-Russell, non-S&P stocks are 30% away from the NBBO. That's effectively a 60+% wide market. He may be calling that a "stub quote", but it isn't.
so note that in the letter (did anyone actually read what they said or is it me?) they used a 32% band for EVERY quote. In effect, the error margin would be in their favor since the tighter band are 9.5%. 60% wide yes, but from middle ground (what the SEC rules mean, 30% from the NBBO side to the same quote side. And they used 32%). Just makes me curious, did you actually READ what they said and look at the data, or just make conclusions?
Sorry market maker stupid fuck, everything you say reaks of the scum HFT you want to be.
Is there a public policy here for stoning?
I don't.
And how do you know there isn't anything to enforce?
You don't.
That's why there are supposed to be SEC investigations. One thing we do know with reasonable certainty is that the SEC is not investigating much of anything, most likely because they have been ordered not to for national security reasons. Unless someone shows up at the SEC headquarters and presents evidence against themselves there will be no investigations. Can't find what you aren't looking for.
Hold on now, I have it from reliable sources that there are heavy investigations into porn sites.
The SEC.
Why do I laugh when I hear those initials?
Oh yeah...it's because they're porn gobbler do-nothings.
Gotta love how someone handed them Madoff on a silver plate 9 years ago, and they did NOTHING whatsoever.
That is utter bullshit. You have no idea what you're talking about. Please stop spewing drivel.
At least once per week I receive an inquiry from the SRO (the SEC's henchmen at FINRA rather than the SEC conducts them) as part of a market sweep of trading in this or that security. They do those sweeps constantly. So constantly that the cost of complying with them is making us consider withdrawing our broker dealer.
In addition, market reg watches us like a hawk. If our quoting engine so much as hiccups we get a call from them.
You really shouldn't make such uninformed statements and you really shouldn't demand things from government without even basic knowledge of how things work now. That's what leads to more government power and idiotic regs.
My my, but aren't we triggered tonight. The fact that you are watched so closely means you are a nobody, just like I'm closely watched. Because I'm a nobody.
I bet you can take the entire 12 inches without even gagging bro. Your job as the SEC apologist is done for the night. Hit the showers and don't bend over.
Yes, I'm a nobody. I run a small broker dealer, so I am not politically connected enough to get away with so much as breathing clean air.
I'm also a woman, you fucking limp dick asshole. Or did the nome de plume "Kat" not tip you off?
So you are assuming that everyone is watched as closely as you? Too fooking funny. Clearly you are sitting on your brains darling.
And like I said, it is obvious you can take the entire 12 inches without gagging. Hit the showers sweet pea.
BTW I grew up with a male school mate who went by the nickname Kat. Combined with the arrogant know-it-all attitude you display here tonight I just couldn't see how it might possibly be a women who was posting. I stand corrected.
As a woman, you don't get very far on a trading floor which is often filled with bigger - albeit much smarter - assholes like you without being tougher than they are.
You, on the other hand, seem unnaturally obsessed with how much penis you can fit into your mouth and how to best best position yourself in the shower to take one in your ass.
I would look into that with a professional if I were you.
"I would look into that with a professional if I were you."
Sounds fun. Maybe Eliot Spitzer can give me a contact with an hourly rate?
Shouldn't you be happy then, that the non-compliant are being called out? That should even-out the play field and you could daydream of being a bigger broker.
Your behavior doesn't seem to match your story...
No, that's not what will happen.
The SEC never goes after the large firms. Those guys own the SEC and one phone call kills any inquiries.
The SEC will harass the small fries like us to produce a mountain of paperwork as proof that they're "on it". If one of the smaller firms accidentally screwed something up, they'll get fined. If it turns out it's a politically connected firm, they walk.
That's how our lovely regulator works in practice.
Still love your avatar, btw. That cat is fierce.
Then you are agreeing that the SEC is corrupt. Why even bother defending them. What's the fuss?
I'm not defending the SEC.
So, what YOU are saying, is that Nanex should NOT point out the wrongd oings of the market and the incompetence of the SEC because it might hurt YOU, the small market maker? Do I have the right? Big thinking there Kat. I bet a lot of things would change under your non-guidence.
One more time:
I'm saying that Nanex is simply asserting that the regulator is not enforcing the bands. None of the evidence he provides supports it, thus accepting his assertion as fact is the stupid.
I'm also saying that demanding the Gestapo at the SEC to march around stomping on regulated firms encourages more firms to leave the regulated space (and leave the requirement to quote at all).
Since the only reason market makers exist is because the SEC's stupid rules created disincentive to provide liquidity naturally, destroying liquidity by driving out liquidity provideers makes the market more fragile and prone to more volatility.
I'm also saying that you're proven that you're too stupid to understand anything I write but demonstrate a disturbing penchant for violence. So, this is the first and last time I will waste my time explaining to anyone on this blog what is really going on in the regulated space.
It's obvious that violent assholes like you just want to see somebody (anybody) lynched and, ultimately, it's you retail idiots sitting in your parents' basement daytrading in your Ameritrade account who are hurt by your lynch mob mentality. So, I may be temporarily frustrated with the SEC's idiocy, but I have a million options.
I'm trying to tell you to stop fucking yourself, but you seem to enjoy it. So, have at it.
Well even better.
60% is from one edge of the band to the other. From the middle (the NBBO) to the outer edge (ie the BBO VS. the actual quote price, is 30%, and they used 32% as a buffer). This is in effect what the SEC RULE OF 30% (31.5 when you condider drift) MEANS.
You really are clueless aren't you? Very sorry about that. Have fun with the boys, i'm sure they love you all night long.
DUDE everything you say, well. IS there a public policy here for stoning? You really need to research the facts and actually read what they say as opposed to looking at one chart. You're a market maker? HAHA yea right more like the back room bitch. Get your facts straight HFT bitch!!
hey stupid. They didn't mention ANY trades. YOU did. THEY only mentioned quotes. Some of these sequences show stub quoting 10,000 times in a row. One time glitch? Nanex IS a data feed provider. OH!! I get it now!! It's YOU that lives under the rock!!!
It's entirely possible that I'm stupid. But if I am, my stupidity can't begin to compare to the depth of yours because I can still read.
Try asking someone with a brain to read and explain to you that they did, in fact, mention TRADES.
where?
The first trade was at $17.25 followed by a series of trades at $0.0001 before resuming at $17.07.
Not that this makes Mrs. Mouthbreather's argument any less devoid of intelligence, mind you.
The stub quote is a prereq for the HFT that fell for that ridiculous bid, unless she thinks there's some zen trader out there giving away $17.2499 of spread intentionally.
We processed all quotes for each of the last 4 days (we have some experience with this), and printed out the time, symbol, and offending quote that was outside a generous 32% band.
08/05/2010 - 1,220,280 stub quotes.
08/08/2010 - 1,342,276 stub quotes.
08/09/2010 - 1,610,744 stub quotes.
08/10/2010 - 1,147,606 stub quotes.
I'm looking at that data and I notice the dates. They're all from August 2010.
The banding requirements became a rule in early December 2010 - 4 months AFTER the dates you're complaining about.
There were no bands of any kind during the period in question in your post, so there was nothing to enforce.
Do you want the SEC to enforce rules retroactively?
No, I want you to competently provide liquidity instead of taking the rebates and running.
On 05/11/2011 the stock RLJ began it's first day of trading (an IPO). The first trade was at $17.25 followed by a series of trades at $0.0001 before resuming at $17.07.
The article said there were indeed trades that occured at levels that are clearly suspicious. You ignore that straight fact as a premise of your reply. Therefore either you are ignoring that fact and continue to espouse your agenda of deflecting anything that might cause a further examination of this claim of abuse through ignorance or you are acting as an agent of the powers that are intentionally deflecting any attempt to further examine this presented trade. Either way you are out of order.
Oh please, investigate away! I'm just trying to give you some insight into how these bands actually work and how the regulator enforces them since I seem to be the only market maker wasting time commenting here. I'm telling you it's idiotic to think that the regulator isn't constantly investigating this crap. Our quoting engine went down for 64 seconds 49 minutes into the trading day a couple of weeks ago and that was investigated, so I have no idea why you think this crap isn't investigated.
But, you forgot two other alternatives in your conclusion:
1.) you have no idea what you're talking about because you've never dealt with compliance for a broker dealer.
2.) There are no market makers (and, therefore, nobody to comply with the bands) in the stocks in question.
I strongly suspect number 2, but I'm certain of number 1.
Thank you Nanex.
Unfortunately, I think the answer to the questions will be more of the same from the SEC....namely, no response or enforcement. This is highly profitable theft going on right now, and I suspect certain people are not going to want the SEC to address the stub quote rule...and the SEC will quietly oblige them.
Of course, when the market eventually collapses, and the algorithmic bandits scurry off with their ill gotten gains, it will be too late for the SEC to win the confidence of the investing public. But then again, the SEC is not interested in the confidence of the investing public. They have zero long term vision of a secure market place or they never would have allowed the construction of all of these financial instruments that now torture equities, or allowed for such fracturing of the exchanges.
Alas, and when the empire is in collapse, the last act is that of looting the treasury...which is exactly what has been happening in the markets for the last three years.
But maybe I am wrong, and eventually Mary Schapiro will finally end her two year long meetings with Jamie "the whiner" Dimon and Lloyd "the squid" Blankfein about which SEC laws she should just forget about and which ones are okay to enforce...and maybe then you guys at Nanex will get a response letter.
Respectfully,
Cdad
**additionally...didn't an ex-trader from Goldman recently go to jail for for leaving the office with a piece of code that, eh hem, Goldman really wanted back?**
Hah..hah...hahahhahaha.
This woman and her cronies are bought and sold sacks of shit. Period.
Thanks CDAD... I was going to write the same thing now I don't need too.
MORE OF THE SAME.
I guess I'm an idiot too, I remember the day I found out the market closed at 1pm but only for the pawns, for the elites it's open all day and night......this was back in the 90's when the global market was practically non existent...
Does this mean insiders get to buy at .01 cent?
You are welcome. I am glad to know that I expressed your thoughts as well as my own. Per the SEC, I suspect most of us are on the same side.
And who, pray tell, are the designated market fakers tossing up the majority of this flak?
What leads you to think they'll even understand this letter at all? I can't think they would -- remember how long it took them to "figure out" the flash crash, when those of us actually watching figured it out in a most, a minute?
As an MM, I'm subject to this stupid rule. Our SRO is very strict in enforcing the quoting requirements.
Not only did a lack of banding not cause the flash crash but lack of bands didn't contribute to it either. Does this joker realize that our quoting systems move so fast that our bids wouldn't have been hit and that even if they were hit we quote in 100 lots to comply with the band? A 100 lot ain't going to stop an avalanche of sell orders.
The trades he is taking issue with are errors. They were busted.
You know, errors still happen - even with regulators doing such a crack job at central planning and all. No system works perfectly. Quoting engines break and there a bazillion trades happening every day. Some of them will be fucked up.
There are virtually no stock market makers left. They're all fleeing the business because of stupid shit like this. Everyone either wants to be in options or trading as a customer. But, keep finding stupid stuff to complain about. I'm sure that if you just use enough coercion, everything will turn out fine.
sounding a little defensive, considering almost everything you say is part of the problem. I don't see them taking issue with any trades, in fact its never mentioned. I see the issue as a RULE not being enforced. Proove 'em wrong or shut the fuck up.
No, I'm sounding fed up with jackasses like you who know fuck all about how regulations work and have never dealt with regulators stomping your feet and demanding shit from your position of cluelessness.
That rule is enforced - unless, of course, it's only enforced for our firm. So, unless you can "proove" that it's not enforced, then I'm going to assume that our firm is treated no differently than any other firm (except for the Too Big To Fails who can do whatever the fuck they want) and it's enforced.
I can stop a fucking penny bid with one line of code.
If you can't figure out how to multiply a number with 0.3, then the cluelessness is clearly square on your shoulders you retarded waste of oxygen.
Even if the trades were DK'd (I can't tell that for sure) the quotes displayed were in violation of banding regulations as they now stand.
Look at the graphs. The data clearly echo machine behaviour. The trades (DK'd or no) on the quotes in question were not spurious "errors."
It's HFT quote stuffing. Plain and simple.
forget about the charts, look at the data files! they are so massive the crashed my browser twice lol
Okay, a "DK" trade is not a busted trade. It's a trade that would go through if the counterparties were known. "DK" stands for "Don't Know" and what is not known is who the counterparties are. "DK" trades are now more commonly referred to as "trade breaks".
Also, if you're going to blame this on the HFT's, then you're barking up the wrong tree.
ONLY market makers are forced to comply with the quoting bands. HFTs are usually not market makers. They usually trade as customers. Do you know the difference? I'll explain it to you if you don't.
For instance, one of the largest HFT shops is Goldman Sachs. GS has pulled out of the stock market making business entirely. They withdrew their broker dealer from the market maker designation. Thus, they no longer have to comply with the bands.
The cost of regulatory compliance has driven out most stock market makers.
It is ENTIRELY possible that there were no market makers in the stocks in question and so nobody was required to quote in those stocks AT ALL.
yay kat!
tell us what we need to know, here! and thanks!
clearly (as mud?) nanex is applying MM rules to brokers who are not MMs?
is this a misunderstanding on their part, or are they looking @ brokers who are acting just like MMs, but are not subject to the same rules, possibly?
now, you've got me interested, kat :SEC’s Schapiro eyes high frequency traders - MarketWatch(may 6, 2011): One of the issues the agency is grappling with in response to the flash crash is whether it should require high frequency traders -- which can represent more than 50% of daily trading volume -- to have the same responsibilities as traditional market makers. Currently the SEC requires market makers -- typically specialists at the New York Stock Exchange or Nasdaq -- to have both a bid and an offer when they want to publish a quote.
In response to a question from reporters about whether these high frequency traders should have market maker responsibilities, Schapiro said “everything is on the table” adding that the entire regulatory structure surrounding these trading firms need to be assessed.
and: OTC Regulation - Applicable SEC & FINRA Rules - OTCMarkets.com rule 38 (definition): The term "market maker" means any specialist permitted to act as a dealer, any dealer acting in the capacity of block positioner, and any dealer who, with respect to a security, holds himself out (by entering quotations in an inter-dealer communications system or otherwise) as being willing to buy and sell such security for his (or HER!!!) own account on a regular or continuous basis.
and: http://www.sec.gov/images/tradex.jpg (schematic of G/sachs (L0L) handling orders, and deciding whether to send them to you, or not, kat)
thx again, and you seem like yourself again, now, too, if i may say so.
I don't know what Nanex is doing, but it's possible what he's seeing isn't the activity of market makers. That's what I'm trying to say.
As for HFTs, what Shapiro is saying is pure nonesense. She's essentially trying to require customers to make markets.
In practice, it's not so easy to distinguish HFT shops from other market participants. What is the specific legal definition of HFT? Also, since the SEC doesn't have jurisdiction over customers, I don't even know how they would do it. They certainly have no capacity to monitor quoting by customers.
As an MM, we come to the floor under our own MPID. It's easy to identify us. As a customer, your orders are sent under your executing broker's MPID. You can only have your own MPID as a broker dealer. So, if you're quoting as a customer, you'd be quoting not as yourself but as your broker. How can they even distinguish YOUR firm's quotes then?
Also, I assure you that even if they could force HFT shops to submit to regs, either it'll suck liquidity out of the market or the firms will restructure so they don't fit the legal description to avoid complying with the burdensome regulation. Trust me - compliance is hell.
BTW, there are market makers on the NASDAQ, Arca and CBSX and other exchanges as well. There used to be a lot of us.
Personally, I don't think we should have market makers at all. We exist only because SEC rules suck liquidity out of the market by preventing people from trading freely and the SEC then created exemptions from these stupid rules for market makers in exchange for submitting to regulation. Now, they've taken away all the exemptions and we have a situation of costs with no beneifts. So, MM's have left (we are leaving stock market making soon too). Instead of getting rid of the stupid regulations to return liquidity, the SEC is now considering expanding its coercion to customers. Who wants to trade in such an environment?
The SEC has damaged the markets far more than even Goldman Sach's HFT operation could ever dream of.
BTW, those posts were "me" too. I have that side to my personality.
The trades, and they were in fact executions, in question were displayed on the CQS feed even if a break occurs, which is after the fact.
I do know. Hello.
Goldman is a hedge fund, yes. Are they not still a designated SLP? (dunno...)
If you even glance at the data files, you will find that these are not thinly traded issues for the most part. It is difficult to imagine that there would be no market maker in these names.
It's all hair thin legal distinctions. The question you're really asking is if GS's SLP is defined by the SEC as a Market Maker. I do not know the answer to that.
However, I do know that Goldman has pulled out of stock market making. Based on that, I'm betting the SLP is not assigned a Market Maker designation by the SEC.
Actually, it's very likely that there are no market makers in very liquid stocks. Lots of people trade them, yes. But, it's possible that there aren't any market makers. MM's make money on the spread and a penny wide spread isn't much of a reward for the hell of being a regulated firm.
I'm not saying there definitely aren't any (i have no way of knowing), I'm just saying that people should open their minds to the possibility befor grabbing a pitchfork and joining the marching mob.
Sometimes things ar very different than they appear at first blush. It's a good thing to require more details and gather more information before demanding someone "do something" about what may be a non-issue.
@ kat:
1) nanex says this didn't cause the crash
2) nanex is not a "joker"
3) stopping sell-offs isn't the point; enforcing rules around entering orders is the point (we don't need xom halted for a $1 sale)
4) "MM" to enter orders w/in a 15.5% +/- of last trade too tough? why? doesn't this lead to "busted" trades? yes or no?
5) if you don't like the rule, why not? if you think the rule is ok, how about joining in asking for enforcement of it?
you don't usually come across like this, at all, imo, kat, so i hope you are ok. that said, your lament about no more market makers is something about which i have also ranted & raved. there usta be a special license to "take the post" and provide order to the mayhem. if people had tried this shit on a well-ordered exchange floor, i think they woulda been banned from the venue. close?
take care, friend. this isn't about you, or at least it shouldn't be, and i'm very concerned that you seem to take it that way, here.
i don't think it is "coercive" to ask a regulator why she doesn't enforce her own rules.
so, again, take care of yourself, ok?
Slewie,
1,) Nanex said it contributed to it. That's not true.
2.) There's a difference between asking the SEC to look into something you consider an irregularity and asserting that the rules are not enforced in general. They are and I can attest to that. Furthermore, most exchanges have always had quoting rules and some have incentives for tight quotes. So, this isn't new and it is enforced. Nanex's demand, as written, is pure bomastic theatre.
3.) They are enforced. At least they are enforced for our firm and for all of the other firms I know of. We had a brief glitch in our system and we got an inquiry right away.
4.)No, it's not too tough and it's nothing new. It's meaningless and produces more market sweeps where we have to prove we were quoting because FINRA has no way to mointor quoting in real time (unlike CBOE). The replies to market sweeps is very costly, though. The OATS files are huge and the regulator forces us to dig through them to prove we were quoting instead of just providing the files and allowing them to dig through them. This is an insane drag on firms' resources (particularly small firms) and many have been driven out because of it. That has left us with fewer market makers.
Thanks. I'm just fed up. The SEC has gone completely insane since 2008 and it's destroying the market. This band rule does nothing at all to improve the market, but it creates the illusion that the SEC is "doing" something to prevent another flash crash. It's completely politically driven - as is the new reg sho rule 204 and countless others that are so dumb even the SEC admits they're idiotic (but is under too much political pressure to get rid of them). Yet all the new rules worsen the market and increase everyone's compliance costs. It's not the quoting that's the problem for MM's it's the cost of hours of compliance with inquiries and market sweeps that waste an endless amount of time for no benefit to the market. The SEC is costly and useless and should be srapped in favour of private certification.
To add insult to injury, none of these rules apply to the Too Big To Fails. If you so much as mention that one of them might have broken a rule, the SEC launches an investigation on YOUR firm instead.
Slewie,
First of all, thanks for being such a sweetheart.
I know what Nanex wrote wasn't about me. But, when the SEC gets pressured, it always attacks tiny firms like mine with a million inquiries (we had nothing to do with these particular names, but I'm sure there will be weird trades in others we do trade). It NEVER bothers the large, politically connected firms. So, I know that even though this has nothing to do with me, the SEC will make our firm bear the burden. I'm sure you can understand that I find this insanely frustrating.
i'm w/ you!
yes, i'm trying to understand! sry 'bout the confusion, kat.
heluva coupla weeks, i betcha.
do not break your rubber band, ok?
fight club! yay!
This week has really kicked our ass. Yes, we benefit from volatility, but GOOD LORD!! We couldn't move fast enough!
Maybe Kat you should try reading between the lines more. Seems to me after reading this for the 10th time, what is being said is that this is a bullshit rule made to make the SEC and sheep feel better. Also, think the stub quote rule is a pain, do you know how much more complex the Limit Up Down rule is (look at the very last linked article)? Might as well just close the doors now. And if you read, that is what they clearly say. In fact, dig deeper and what is said is no new regulation is needed, only the will to enforce the current REG NMS.
So they come down on the SEC and your pissed? Funny, that sounds like who you are pissed at as well. And also remember, it wasn't THEM but the SEC who mentioned stub quoting SO heavilly in their final flash crash report. I don't see you mentioning that, or complaining about incorrect data regarding that report.
Make it fair for everyone seems to be the general tone. Don't you agree?
Reg NMS is a POS as well, Ripper. It favours the large exchanges over the smaller ones, effectively shutting out competition to NYSE and the other mega exchanges. Monopolies throttle innovation. The large exchanges practically wrote that rule for the SEC and thos moribund fools just nodded their thick skulls and stamped their approval.
Look, the current regs are so bad, they aren't worth enforcing. The SEC is a politically driven body with a "cover our ass" policy. Its incentives are exactly the opposite of what its mission statement.
The SEC was desparate to blame anyone but themselves for the flash crash. They've sucked liquidity out of the market. They prevent normal price discovery, so when the invevitable volatility hits, it's no surprise to anyone. Did you read their feeble explanation of the flash crash. I'm used to their idiocy and yet even I sat there slack-jawed. Does anyone actually believe this horse shit?
BTW, I won't tell you how I know this, but the SEC has admitted that all the rules it has rolled out in response to the flash crash are just window dressing.
Well Kat, yes I have read it. Did you read Nanex's three reports about the flash crash? You do know that Nanex is a company, not a person, right? You do know that they were the ones Waddel & Reed and Barclays gave their trade data to in order to refute the SEC reports, right? You think W&R and Barclays gives that data to rougue shits who don't know what they are doing (this has all been verified and reported on by mainstream media as well as Zerohedge, have you been paying attention)? What I suggest is maybe you do a bit more research into what they have done. Yea you're a market maker, blah bah i'm so not impressed. But that doesn't mean you're not smart, so maybe you should research the facts first.
I'm assuming that a person, not the company as a whole is responsible for the report. That's why I use "he" rather than "it".
The team responsible for putting together the data may very well be very smart, but that doesn't mean that they came to the correct conclusion.
Quoting authority is not science.
And, no, I do not slavishly follow zerohedge on an hourly basis like you do. I have a company to run and plenty of other news that is more important to my business, so I do not know all that is covered by ZH, nor do I care. ZH has been *gasp* wrong about plenty of things. I don't just swallow as truth everything someone utters based on who is doing the uttering.
The only reason I mentioned that I'm an MM is to explain how it is I know that the bands (which do not stop flash crashes or contribute to their prevention, btw) are enforced.
You didn't even know that the bands only applied to MM's - not all firms that trade the stock or even all broker dealers. So, I suggest you check yourself before babbling about other people's ignorance and lack of research.
And this whole exchange is why ZH and its members are a shining star in the world of financial journalism. Aside from the hurt feelings that is...
"errors still happen" "Some of them will be fucked up"
MILLIONS of them, you scum-sucking leech.
Maybe those people went into options or trading due to a sense of pride that they can't get at the trough like yourself. You're worse than the government.
Right, they will really catch some big guys.. I bet if there are enough publicity exposure, then they will catch a couple of small fries in a high profile fashion. Then there will be some publcity news release about the trial and the verdict. None of the big bankers or firms will ever be named. They are untouchable.
exactly right.
Wait a minute, how can anyone cast aspersions on the SEC? Didn't the SEC nail Martha Stewart and Bernie Madoff? Well maybe they didn't get Madoff right away, but they did after he confessed. Anyway the SEC is in there fighting for the small time investor and is no way influenced or corrupted by politics? I'm sure of it...err I think.
Well maybe they didn't get Madoff right away, but they did after he confessed.
Now that's what everyone is talking about. They didn't get him till he confessed? What a fucking joke. We give credit for that? And the SEC is supposed to ensure confidence in the markets? I am not some big trader and I am a dumbfuck when it comes to some of these bond issues, but I will tell you that I am getting better, thanks to ZH and I am getting pissed off about what the truth is presenting me, and I can tell you that I am going to become part of the movement, its a movement, and its growing, a movement that will not accept this outrageous behavior of these appointed officials ignoring, looking the other way, regarding the most important and imminent issues, that which deals with the very confidence of the investing public, and I will revolt and I will join and pursuade others to join me in revolting this behavior. I will tell you there is a movement and it is growing. Not because of me. It is growing because people, yes people, are fucking pissed off and guns and ammo is being bought and people, yes people are saying things, things that are bad. It is not good on the street. I can tell you that because I am on that street. Just saying.
'They didn't get him till he confessed'? What a fucking joke. We give credit for that?
Yes - that was a joke, and a really good one at that. If they didn't get him til he confessed, then they didn' get him at all, did they? The joke is worded to be the opposite of giving credit.
Madoff was simply a recycled script. Same old sh!t, different era.
Bravo! I am happy to see proactive action backed with facts from Zerohedge. More of us (myself included) need to step up and write letters and not just lament in the comments section.
We may not make a difference but at least it may educate some lowerlevel in gov who ends up reading the letters before they are tossed aside.
Pessimism will crush anyone but being proactively angry can be liberating.
So I was hangin' with the Amish quilting ladies today and I overheard one of them say "did you know someone tried to sell 100 shares of Exxon Mobil and it caused the stock to immediately plunge by 40% thereby initiating a trading halt in the world's second largest publicly traded company?"
there was a stony silence and then the regular gossip resumed about Billy and Joey and who has the fastest horse and buggy.
I thought to myself "ooh, boy. that was a close one." If the Amish know then it's possible others know as well--know what i mean?
Sadly, yes.
1% of the pop own more than 50% of the equities. 80% is owned by top 10%, and I believe those numbers are dated as I pulled them from memory.
It's interesting that we are discussing the fraud taking place perpetrated by the rich, on the rich. They are in control of the parlor game, and by sneaking around through their complex web of secret passages and trap doors, we can't catch them.
Problem is that when someone gets lucky and catches them or they just get lazy and get caught, it ends up blowing up the whole damn world, or at least they throw that trap door of TBTF etc to cause mass hysteria.
I must admit I can sympathize with the hopelessness and helpless feelings out their in couch potato land. However, I know that the only force that can make a difference is our organizing against the corps. I will now recite the talking points we need to get out their into the MSM:
1. Corporations need to build training acadamies, rec centers (bath houses), and factories, and train the plebs to make things in the factories, be productive and self sufficient.
2. Corporations must pay their wage slaves 50% more money and ask that the wage slaves do more than press the 'start' and 'stop' button all day.
3. Corporations must stop keeping 90% of all the wealth (that's the board of directors and top executive thieves) for safe keeping in their banks, and instead share it with the ones who do all of the work and are responsible for collecting money on behalf of the company.
4. (bonus) Corporations must have their attack dog lawyers stand down from writing laws in all world governments and markets that favor profit above all other considerations.
I'm pretty sure those last two points are made by unions, but those are evil according to MSM.
If these demands of the people are not met, these events will get worse and bring down their whole empire, and likely their heads.
Fuck the SEC!! I cant tell you how many times I grabbed the white phone and told everyone that that Madoff was fucking everyone...I can't tell you how many times as a trader I told Goldman to go fuck themselves because they were trying to fuck mom and pop... ALL to no avail... no one gave a shit about right or wrong. no one wanted to do the right thing!! I went to my bosses when I had inside info given by mystake and I said I cant be involved and I cant tell you why..and they looked at me like I was retarded...I was demoted and the fucktards did as they pleased>> well fuck you all!!! I can sleep at night and I dont own any stock thats going to 0 So fuck YOU you fucking fuck fucks!!
you sound like a guy i knew in 'nam~~~j. galt? tell it like it is, bro!
peace
Your resume needs work...
Would lower interest rates until 2013 be a long ass stub quote?
lets make everyone trade in 0.01 increments..that would solve so much
cds should be on an exchange, at least the indices
What is the official stance of the SEC on HFT? Have they taken a stance or is it an issue they are "studying"?
What is the official stance of the SEC on HFT?
They are making progress. After much study, they have concluded that it exists.
That's the kind of bold leadership we need!
.
..
Carrying on the fine tradition first established by Ol' Joe Kennedy himself. - Ned
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