No, ITG, Zero Hedge Would Prefer To Not Regulate You Either

Tyler Durden's picture




 

While reading Advanced Trading today we stumbled across the following curious excerpt:

Advanced Trading: You mentioned regulators and politicians are ignorant ...

[ITG's Jamie] Selway: I would say that their knowledge is incomplete.

Advanced Trading: Is this causing HFT to be scape-goated?

[ITG'S Jamie] Selway: Yes, there's a mixture of that. I am fond of saying I am not a huge regulations guy but I am a fan of regulations at an appropriate level that boosts confidence. I for one would prefer to be regulated by the SEC and not by ZeroHedge. So we have a team of experts and multiple agencies that are expert in regulations and know the markets and have the resources.

And here we were thinking that after three years of reading us, at least the supposedly more sophisticated market elements would have moved beyond merely pedestrian stereotypes. Alas, as always happens when we assume anything other than sheer stupidity, we end up 100% wrong.

Here's the deal Jamie: Zero Hedge, knowing full well we are quite mortal, and as like everyone else - very susceptible to temptation - realize we too 'have our price', would have no interest in finding out just what said "price" may be, by succumbing to bribery or any other form of corruption by you and/or your HFT peers and competitors. Nor do we have an interest in pretending to "regulate" you for several years, then submitting our resumes to you, tired of five figure government jobs, and expecting some quid pro quo in exchange for all those years when we saw the HFT 'lobby' engage in gross market manipulation, and demanding some form of equitable recompense, preferably in a far better paying job (for example moving from the NASD to Goldman Sachs... in a purely hypothetical scenario of course) but really anything with a lot of the zeros (that we enabled) at the end of it, would do.

We have no interest in that.

We realize that makes us different than the SEC. Because frankly, just like you, we also realize that the first entity to be purchased in any regulated venue, is none other than the regulator. Which in the absence of the SEC, we assume would be us.

We have no interest in that either.

But more importantly, we would not even dream of regulating you, or anyone else for that matter, because frankly, unlike the collapsing and insolvent status quo, we believe in the myth of a fair market, one where a room full of academics does not believe it is smarter than the collective rational whole of countless unitary market actors.

We believe in a market that regulates itself.

That means that the banks can go hog wild in loading up on CDOs, selling CDS, leveraging themselves 1000x times, and whatever else they feel like doing in pursuit of that ever more elusive ROE, but when they blow up, as they always inevitably do in a world in which they know that the politicians and regulators they have purchased have no alternative but to rescue them, they blow up. Period. Game over: not a penny in taxpayer money would ever be used to rescue them.

That means abolishing the Fed, firing the 10 academics that determine the fate of the world on a daily basis, and letting the market itself determine the true cost of money. Of course, that also would mean scrapping generations of Ivy League-taught economists as their art, pardon science, is exposed to be the flawed and erroneous travesty that has led the world to a precipice, whose outcome could easily be global war next. Just like that last time.

But that is irrelevant to you.

What is relevant, is that we would most certainly let you and your "market-making, liquidity providing" colleagues run amok in the market, sub-pennying each other, stub quoting endlessly, churning and quote stuffing to the point where you and all your HFT peers drive the last remaining real investor out of the market, in the process sending volatility to record proportions and terminally breaking what's left of the a stock market. At that point the real cannibalization can begin, which is the only way that the market can eradicate itself of the scourge that is HFT - because what would happen then is the perfectly normal and long overdue reversion to the mean, long pushed away from its equilibrium point courtesy of endless artificial intervention propping up parasitic trading, or, said otherwise, your quarterly EPS bottom line, which of course, is all your care about.

Incidentally we have seen what happens when HFT is not regulated, such as ever since the adoption of Reg NMS: first an algorithmic take over of all trading, then a flash crash, then hundreds of billions in retail capital outflows as the retail investors figure out what a sham (and scam) the marketplace truly is, and finally the collapse in volume, which as you well know Jamie, is the death knell for you and your peers.

What is most ironic in all of this, is that the second before you pull the plug on your algos for the last time, as the hollow market collapses under its own weight, you will wish that Zero Hedge had been regulating you...

It will be too late.

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Tue, 02/28/2012 - 00:06 | 2202626 Nacho Libre III
Nacho Libre III's picture

Awesome

Tue, 02/28/2012 - 00:15 | 2202653 redpill
redpill's picture

Bahahahah.

 

Zerohedge.  Working as intended.

Tue, 02/28/2012 - 00:22 | 2202668 phyuckyiu
phyuckyiu's picture

The closest i've seen to a manifesto by Tyler. FUCKING AWESOME.
P.S. Please add an Orson Welles Citizen Kane clap here.

Tue, 02/28/2012 - 00:27 | 2202688 LowProfile
LowProfile's picture

Best damn ZH editorial yet.  Genius.

Tue, 02/28/2012 - 00:32 | 2202701 AbruptlyKawaii
AbruptlyKawaii's picture

YOU !!!!!! CANNOT !!! BUY  !!! A !!! B !!! C !!! MEDIA !!! LTD !!!!!

Tue, 02/28/2012 - 00:43 | 2202724 Hard1
Hard1's picture

Brilliant Tyler.  Can you explain it with apples to the SEC pleeeez

Tue, 02/28/2012 - 00:52 | 2202741 JPM Hater001
JPM Hater001's picture

I think hand puppets and a yukalalee (sp?) would suffice.  This really is just one big Greek Tragedy.

Funny thing about Greek Tragedy...the stories are told in one continual stream of time-that is hours or days in the story rarely pass...even people from afar show up on que as if called to appear as it unfolded in real time.

Cue ZH.

Oh, and thank you.

Tue, 02/28/2012 - 01:05 | 2202760 The Big Ching-aso
The Big Ching-aso's picture

 

 

 

Apparently "Doing God's work" has no regs attached by The Big Man.  It's almost like these guys have a heavenly carte blanche.

Tue, 02/28/2012 - 01:18 | 2202781 The4thStooge
The4thStooge's picture

He broke the first rule...

Tue, 02/28/2012 - 05:22 | 2203060 TheFourthStooge-ing
TheFourthStooge-ing's picture

Whoa, whoa, whoa, Jamie's cryin'.

 

Tue, 02/28/2012 - 07:18 | 2203128 Comay Mierda
Comay Mierda's picture

It's posts like these that will make me miss zerohedge when the governments enact martial law on the internet and shut down websites that expose the truth. Maybe it's time we develop a peer to peer truth distribution method?

Tue, 02/28/2012 - 09:41 | 2203376 Stoploss
Stoploss's picture

NOT HAPPENING..  You underestimate the readerships abilities. The endless propaganda has softened your brain. Snap the fuck out of it. When the time comes and assistance is needed, it will be there, rest assured.

Tue, 02/28/2012 - 10:13 | 2203522 trav7777
trav7777's picture

this randian crap is all very well and nice but markets don't regulate themselves.

What we are seeing now IS how markets self-regulate.  Powerful actors act to exclude competition and hoard capability.  It's really an evolutionary mandate.

There NEVER WAS a free and orderly market.  I have no clue where Tyler or any of the rest of these people...maybe this springs from their collective disillusionment at how utterly bullshit it all was...no clue where they come up with this fantasy that things were ever going the right way.

No sooner was this country founded than people tried to subvert it.  Only people acting with effectively religious zeal had the steadfastness to resist the corruption.  The times when there were "principles," were the times when people held thoughts that you morons collectively view as tantamount to naziism.

Tue, 02/28/2012 - 10:36 | 2203658 Hulk
Hulk's picture

That was good...

Tue, 02/28/2012 - 11:18 | 2203738 Theta_Burn
Theta_Burn's picture

... 

Right, regulators are supposed to, hows that been working out?

enjforcing just 1/2 the laws we have on the books would create a fair market, hows that lack of consequence been working out?

Passing out a few well deserved indictments would go a long way towards a "regulated market"

Want a regulated market? get rid of the regulators....

 

 

Tue, 02/28/2012 - 11:37 | 2203775 thedrickster
thedrickster's picture

To refer to markets in which liqudity is created through an outright fraud called fractional reserve banking, the unit of measure decays exponentially due to the same fraud and in which daily price action and secular trends are determined entirely through the utterances and whims of central planners "self regulating", is truly absurd.

So while you criticize an imaginary self regulating utopia, I would only advocate the rule of law making an appearance in financial markets. A good place to start would be non-captive grand juries, as originally codified/intended.

Now if your argument was actually that the market self regulating manifests itself in legislators falling under control of market participants then, this would seem to be a strong case for further decentralization no?

Tue, 02/28/2012 - 09:28 | 2203330 JPM Hater001
JPM Hater001's picture

That song was so ripped off.

Tue, 02/28/2012 - 01:22 | 2202786 Buckaroo Banzai
Buckaroo Banzai's picture

Zero Hedge, FUCK YEAH. Coming again to save the motherfucking day, YEAH.

Tue, 02/28/2012 - 03:11 | 2202947 ebworthen
ebworthen's picture

God forbid the HFT crowd should have real people see them naked and call them ugly.

Tue, 02/28/2012 - 04:13 | 2203016 Spirit Of Truth
Spirit Of Truth's picture

Amen.

Tue, 02/28/2012 - 05:04 | 2203053 Element
Element's picture

Max Keiser totally nailed what to do in this recent diatribe:

http://www.youtube.com/watch?feature=player_detailpage&list=UUBIwq18tUFr...

Tue, 02/28/2012 - 07:25 | 2203137 Ace Ventura
Ace Ventura's picture

That was friggin' epic. +1 quadrillion.

Tue, 02/28/2012 - 09:41 | 2203373 Upswaller
Upswaller's picture

Jamie Selway was personally sent a copy of this response to ITG, courtesy of Yours Truly. Just trying to spread the joy!!!

Thanks, ZH, for all you do.

Tue, 02/28/2012 - 11:02 | 2203763 putaipan
putaipan's picture

god bless and protect tyler, max, dr.michael hudson and bill black !!!

Wed, 02/29/2012 - 05:32 | 2207137 Likstane
Likstane's picture

Max is the real mayor of Paree. E P I C !

Tue, 02/28/2012 - 01:06 | 2202762 mikla
mikla's picture

Most ironic is that the ZH assertion is fundamentally that which under-pins all market theory:  That a market can exist.  Market transactions fundamentally exist merely because of public information and public commentary, which is all that ZH does, and all that ZH represents.

ZH is commentary based on public information.  That is how markets work (unless you are a Congressman, Regulator, or Favored Buffet).  The "theory" is that regulators enforce the "integrity" of the information imbalance, such that markets can actually function (e.g., that trades can take place).  If information imbalance is too great, all trade is halted, because no bid can be accepted (because the "buyer" would "know" he was being "taken" based on the greater-information-available to the "seller").

However, in "reality", we have the opposite:  The "regulators" (and government/oligarchies) conspire to fleece-and-defraud all would-be market participants.  That is why these would-be market participants are leaving, and will *never* return.  Ever.  Not only do we lose the Boomers (leaving their careers and dying), but the entire working class generation is lost:  They see the fraud, and they will not return.  Ever.  And, they are not wrong for that conclusion.

Brilliant Tyler.  Can you explain it with apples to the SEC pleeeez

The SEC won't understand, because they are paid not to.  However, the central claim is something like, "The SEC is granted a place of authority, with the purported purpose of defending the Public Trust, over which they preside with incompetence, for the sole purpose of selling their position to the highest bidder, in violation of that Public which granted their authority."

The closing is most ironic, and humorous, because it is so very true:

What is most ironic in all of this, is that the second before you pull the plug on your algos for the last time, as the hollow market collapses under its own weight, you will wish that Zero Hedge had been regulating you...

The system is collapsing now due to a mess of the regulators' own making.


Tue, 02/28/2012 - 01:58 | 2202857 blunderdog
blunderdog's picture

Succinct and very well said.

The belief in the potential existence of a market seems Platonic.  The realist vs. the nominalist.  

Tue, 02/28/2012 - 09:12 | 2203292 aldousd
aldousd's picture

Plato believed that the world should be ruled by philosopher kings. What we are talking about is the opposite of that.

Tue, 02/28/2012 - 09:31 | 2203339 JPM Hater001
JPM Hater001's picture

Plato also believed we had a predestine role in society.

I think he was a mormon too but I might have that wrong.

Tue, 02/28/2012 - 11:49 | 2203980 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

I think he was a mormon too

Forgot the </sarc> maybe?

Tue, 02/28/2012 - 04:21 | 2203021 mendigo
mendigo's picture

I think that increasingly it is the role of our government not to legislate or regulate or even so much as make policy as it is to manage the public perception for the good of the public - Joe six pack if you will.

I expect the sec is staffed with our brightest kids working hard to protect thier own assets and hence the status quo.

Its going down, but it won't be pleasant I think.

Tue, 02/28/2012 - 12:39 | 2204254 catacl1sm
catacl1sm's picture

I logged in just to +1 you.

 

The problems with that exist in a fair and free market (incorrect or insufficient information, rational irrationality, etc) can be minimized and hedged in a FAIR and FREE market. We currently have neither, and haven't for quite some time.

Tue, 02/28/2012 - 00:41 | 2202721 TruthInSunshine
TruthInSunshine's picture

ITG is going the way of the dinosaurs, at any rate.

They're already a vestigial organ; road kill, if you will.

The irony is that it's precisely the complete and utter incompetency of the SEC or any other agency in preventing 'the equity markets' from being completely and totally rigged, thus leading to the ever increasing loss of confidence in anything remotely resembling a fair, free investment environment, that has signed ITG's death certificate.

Great job, midget/donkey porn surfers at the SEC. It's not as if individuals presented concrete evidence of such things as the 50 billion dollar Madoff Ponzi to you nearly a decade ago, and you did nothing to stop said Ponzi, as just one example of your proving that Wall Street and the 'equity markets' is the biggest criminal racket ever to have been devised, because your level of ineptitude is beyond imagination.

Good luck with your revenue model going forward, ITG.

Tue, 02/28/2012 - 08:45 | 2203224 Imminent Collapse
Imminent Collapse's picture

Rock 'em Tyler! Kick ass, take names. Love it.

Tue, 02/28/2012 - 09:05 | 2203273 aldousd
aldousd's picture

Agreed.

Tue, 02/28/2012 - 00:35 | 2202709 a growing concern
a growing concern's picture

Tyler for president, bitchez!

Tue, 02/28/2012 - 07:36 | 2203148 williambanzai7
williambanzai7's picture

HFT ZONE

Tue, 02/28/2012 - 03:37 | 2202979 vast-dom
vast-dom's picture

ZereHedge is not whorish enough to lead the ship of shitheads, nor foolish enough to attemp the futile endeavor.

Tue, 02/28/2012 - 07:44 | 2203149 Zero Govt
Zero Govt's picture

Correct.

in "finding our price" ZH shows a clear understanding no authority can be trusted, not even ZH itself.

the Free Market works because, like nature (indeed all life), it has no central authority ...as all such points can be corrupted or simply collapse due to circumstance (change: the only constant)

Tue, 02/28/2012 - 09:09 | 2203285 aldousd
aldousd's picture

I'm not implying that you personally don't get it, because I'm sure you do, but when you talk about the free market it's always important to point out for the kids at home that nobody thinks what we have, or a mere removal of regulation from the status quo would be able to be called a "Free Market."

Tue, 02/28/2012 - 00:18 | 2202661 Unprepared
Unprepared's picture

"I for one would prefer to be regulated by the SEC"

 

Hahahaa

Tue, 02/28/2012 - 00:26 | 2202682 Miles Kendig
Miles Kendig's picture

If only no fault divorce worked under SEC rules....

Schapiro is almost as criminally complicit

http://dealbook.nytimes.com/2012/02/22/s-e-c-chairwoman-defends-settleme...

As Holder

http://dealbook.nytimes.com/2012/02/23/holder-defends-efforts-to-combat-...

Tue, 02/28/2012 - 08:46 | 2203227 RiverRoad
RiverRoad's picture

In their dreams to be managed by that bunch of deliberate bumblers.

Tue, 02/28/2012 - 03:47 | 2202991 crazyjsmith
crazyjsmith's picture

Damn Tyler, that is exactly what I was about to say.

Tue, 02/28/2012 - 07:01 | 2203117 jcaz
jcaz's picture

Powerful shit....  A man with this grasp can overcome the hypocracy, no doubt-  it's the only solution for the status quo...

Tue, 02/28/2012 - 11:59 | 2204034 LongBallsShortBrains
LongBallsShortBrains's picture

Never seen so many green arrows.

Talk about hitting the corrupt nail on the head.

It would be hysterical to see the response...........

Crickets

Tue, 02/28/2012 - 00:06 | 2202627 chump666
chump666's picture

Well we are due for another flash crash. 

Tue, 02/28/2012 - 00:06 | 2202630 lead salad
lead salad's picture

DAAAAAAAAMN.

Tue, 02/28/2012 - 07:27 | 2203140 Ace Ventura
Ace Ventura's picture

Hey lead, how did you get your animated avatar to work? Mine only displays as a stationary image?

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