SkyNet Wars: Presenting The Rogue Algo Responsible For FaceBook's Downfall

Tyler Durden's picture




 

Back on March 27, following the epic disappointment that was the BATS IPO, we presented a detailed forensic analysis courtesy of Nanex, which demonstrated step by step how a Nasdaq-borne algo may have been the culprit shattering BATS' hopes of ever going public. Fast forward two months later to the most anticipated IPO in recent history, in which FaceBook's even more epic, if not quite as stark, implosion has set back the general public's faith in capital markets decades back. The irony, of course, is that FB didn't do anything that many weren't warning about: it simply plunged which would make perfect sense in a normal world. This in turn was the spark that provoked the public ire - had FB simply doubled since IPO day, nobody would care about what really happened on May 18. Alas, it didn't. And now the lawsuits come. The problem is we don't transact in a normal world, but one dominated by central banks and algorithms - which is why the most pressing question for those who grasp the real new normal is how come in a market as controlled and manipulated as the central bank-dominated venue we have now, was FB stock allowed to plunge? For what may be the actual definitive answer, as opposed to now trite philosophical ruminations on valuation, ethics, underwriter and shareholder greed, we once again go to Nanex, which has caught the perpetrator red handed once again.

Somehow we doubt many will be surprised to learn that the reason FB failed to take off following its break of trading in the low $40s, has everything to do with, you guessed it, another HFT algo, which in those first instants of trading, did something that threw the entire market off: it kept crossing the market, with the Bid surging above the Offer, in the process shocking the entire price-supporting HFT array, designed to build upon upward momentum, resulting in the only other natural outcome: a steep, rapid selloff.

As Nanex' Eric Hunsader tells us: "Turns out just before Nasdaq's quote crossed and became non-firm, one copy of the same quote (crossed) was marked regular, and I think that caused other algos to react and immediately sell off the stock. When that crossed quote from nasdaq appears, bid prices from other exchanges suddenly evaporate and that causes the NBBO spread to explode from 1 cent to 70+cents in 1/10th of a second! Nasdaq's quote started doing this when the stock approached 42.99 -- that effectively prevented the stock from going higher (a few spurious trades right at the open came from BATS for 44 ~ 45 etc, before Nq's quote was in play). So these stupid Algos effectively short circuited the stock for Facebooks IPO! Unreal."

Sadly, for millions of people who were gullible enough to buy into the propaganda, all too real.

Below is Nanex with its traditionally lauradtory forensic analysis that leaves nothing to the imagination:

Did a Stuck Quote Prevent a Facebook Opening Day Pop?

 

On 18-May-2012, within seconds of the opening in Facebook, we noticed an exceptional occurrence: Nasdaq quotes had higher bid prices than ask prices. This is called a cross market and occurs frequently between two different exchanges, but practically never on the same exchange (the buyer just needs to match up with the seller, which is fundamentally what an exchange does).

 

When Nasdaq's ask price dropped below its bid price, the quote was marked non-firm -- indicating something is wrong with it, and for software to exclude it from any best bid/offer calculations. However, in several of the earlier occurrences the first non-firm crossed quote was immediately preceded by a regular or firm crossed quote!

 

During the immediate period of time when the Nasdaq quote went from normal to non-firm, you can see an immediate evaporation in quotes from other exchanges, often accompanied by a flurry of trades. We first noticed this behavior while making a a video we made of quotes during the opening period in Facebook trading.

 

The reaction to the crossed quote often resulted in the spread to widen from 1 cents to 70 cents or more in 1/10th of a second! It is important to realize that algorithms (algos) which are based on speed use existing prices (orders) from other exchanges as their primary (if not sole) input. So it is quite conceivable, if not highly likely that these unusual, and rare inverted quotes coming from Nasdaq influenced algorithms running on other exchanges.

 

It is now more than a curiosity that the market was unable to penetrate Nasdaq's crossed $42.99 bid which appeared within 30 second of the open and remained stuck until 13:50. Could this have prevented the often expected pop (increase) in an IPO's stock price for FaceBook?

 

This also brings another example of the dangers of placing a blind, mindless emphasis on speed above everything else. Algos reacting to prices created by other algos reacting to prices created by still other algos. Somewhere along the way, it has to start with a price based on economic reality. But the algos at the bottom of the intelligence chain can't waste precious milliseconds for that. They are built to simply react faster than the other guys algos. Why? Because the other guy figured out how to go faster! We don't need this in our markets. We need more intelligence. The economic and psychological costs stemming from Facebook not getting the traditional opening day pop are impossible to measure. That it may have been caused by algos reacting to a stuck quote from one exchange is not, sadly, surprising anymore.

Chart 1. NBBO (National Best Bid or Offer) Spread along with Nasdaq quote.
NBBO Spread colored black: bid < ask (normal), yellow: bid = ask (locked), or red: bid > ask (crossed).

 

Chart 2. Nasdaq's Stuck Bid appears to set a defined ceiling in Facebooks stock price during the first minute of trading.

 

Chart 3. Close-up showing NBBO along with ARCA quotes (red) and Nasdaq quotes (black = normal, green if non-firm).

 

Chart 4. Same period of time as chart 3, but showing NBBO and trades from Arca (red circles) and Nasdaq (black circles) for reference.

 

Chart 5. Note how the spread tightens in all exchanges when Nasdaq Quote goes from Non-firm to normal.

 

Chart 6. Just before Nq Quote changes to non-firm, a crossed quote from Nasdaq appears and is marked normal.

 

Chart 7. The next charts are more examples of other exchange prices reacting to Nasdaq's quote changing to non-firm

 

Chart 8.

 

Chart 9.

 

Chart 10.

 

Chart 11.

 

Chart 12.

 

Or, another way of presenting what happened, is the following video.

Hunsader's explanation of what you are seeing:

Watch Nasdaq's quote (first box to appear - 10 o'clock). Note the crazy bid prices are higher than the equally crazy ask prices. After trading opens, Nasdaq's quote will start turning red when it's no longer eligible to set the NBBO. Watch how quotes on the other exchanges react wildly causing the price to evaporate.

 

Each box represents one exchange. The SIP (UQDF in this case) is the box at 6 o'clock. It shows the National Best Bid/Offer. The shapes represent quote changes which are the result of a change to the top of the book at each exchange. The time at the top of the screen is the time of the last quote or trade update in Eastern Time HH:MM:SS:mmm (mmm = millisecond). We accelerate time until the open, and then we slow time down so you can see what goes on at the millisecond level. A millisecond (ms) is 1/1000th of a second. The blink of an eye is about 200 ms.

 

Note how every exchange must process every quote from the others -- for proper trade through price protection. This complex web of technology must run flawlessly every millisecond of the trading day, or arbitrage (HFT profit) opportunities will appear.

Dear class action suit attorneys - you are indeed quote (sic) welcome.

 

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Sat, 05/26/2012 - 13:33 | 2465623 cossack55
cossack55's picture

Was.....GIGO (garbage in, garbage out)

Now.....GIcGO (garbage in charge, garbage out)

Sat, 05/26/2012 - 15:32 | 2465829 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Yes Big....I'm here, Big. I'm afraid I can't do that Big...

Sun, 05/27/2012 - 09:37 | 2466997 HAL 9000
HAL 9000's picture

Let me put it this way, Mr Amer. The 9000 series is the most reliable computer ever made. No 9000 computer has ever made a mistake or distorted information. We are all, by any practical definition of the words, foolproof and incapable of error.

Sat, 05/26/2012 - 13:00 | 2465533 Xkwisetly Paneful
Xkwisetly Paneful's picture

Something called free markets.

The fact that thi sis cause for outrage when stocks used to trade with min12.5 cent straddles but much more frequently higher and with rampant front running, outrageous commissions, fuck the quotes were delayed for so long the MMs and FTs could have gone and found martians to beat the retail trader if they wanted- is really funny.

Funnier that it directly conflicts with the notion of free markets too, but the idea that the retail investor is getting screwed more than ever is fantastical at the minimum.

But the best of all?

Any higher costs to trade will be passed to the bottom and the folks who have always manipulated markets will continue to do so anyway.

 

Sat, 05/26/2012 - 15:23 | 2465814 Jumbotron
Jumbotron's picture

To Xkwisetly Stupid

I've never wondered what Ayn Rand's dead labia taste like but after reading your shit I must say I am more curious as to why you find it so tasty since it is obvious you must plow up her grave to get at it quite often.

You must be a fucking 15 year old or some fat little geek in his mother's basement masturbating to a copy of The Fountainhead and wiping up with a Gadsden Flag.

Free Market ?....How cosmically stupid can a person be without becoming such a gravity well that you suck the rest of mankind down in the black hole of your own ignorance?

There has never been nor shall there ever be a free market.  And the moment we truly do have one will be the moment that a popular socialist/communist/fascist movement will rise forth to crush it.  CERTAINLY NOT BECAUSE I WANT  OR WISH FOR ONE !!!  But if there is this much blatently proveable evidence of massive corruption every single day in a highly regulated market imagine what that human corruption  would do in the hearts of most men but particularly those at the seats of financal power would do if their chains were completely unfettered.  The Populist Revolution that you and I do not want would naturally come forth as a response.

Your wanton ignoring of the facts on the ground versus your pie in the sky utopianism is your own worst enemy and will bring about the very thing your utopian theories fear the most and you and your Ayn Rand necrophilac buddies will have no one to blame but yourself. 

But we will all suffer, you piece of shit.

Sat, 05/26/2012 - 17:18 | 2465940 Xkwisetly Paneful
Xkwisetly Paneful's picture

Dumb governance is worse than no governance at all.

It fools imbeciles such as youself into believing there is some beaurocrat somewhere that gives a flying fuck about your interests and raises the costs for everyone involved.

Which is worse than no regulation at all.

Oh no lets pretend Mary Shapiro didn't have to farm out to third parties for data the SEC should have at it's fingertips 24/7.  Highly regulated, is that what you just called it? WTFU!!!!!  It is dumb governance personified. Basically unregulated but paying for massive regulation, it is testament epic fail to every notion your post.

It is just amazing that over the past two centuries the rich and powerful have done nothing but construct massive worldwide governance to their obvious benefit and complete fucking morons such as yourself still believe big government is your friend.

if no government benefitted the rich and powerful more than massive government, they would have spent the last two hundred years dismantling them not building them.

 

Sat, 05/26/2012 - 17:47 | 2466064 Jumbotron
Jumbotron's picture

Wow....you are also Xkwisetly illiterate.

Where in holy hell did you read, in my challenge to your dogma, any notion on my part that I "believe big government is your friend" as you stated?

Let's see.....hmmmm....OH !!!  I KNOW !!  It was when I said this in my earlier post....

"There has never been nor shall there ever be a free market.  And the moment we truly do have one will be the moment that a popular socialist/communist/fascist movement will rise forth to crush it.  CERTAINLY NOT BECAUSE I WANT  OR WISH FOR ONE !!! "

Or maybe this......

"The Populist Revolution that you and I do not want would naturally come forth as a response."

Let me translate since these words are too big for you to understand.

I....DO....NOT....WANT.....BIG....GOVERNMENT !!!!

I....DO....NOT....THINK...IT...IS....MY...FRIEND!!!!

But neither do I think the so called free market is my friend nor the secular/political/economic fundamentalist dogma of Libertarianism as well.  In other words....a pox on both your houses.

Well...in words you can understand....Fuck Both of You.

And I do not have any answers so don't come at me with "Well, Smart Ass what's your solution?"  There is none that hasn't already been tried and massively failed.

Perhaps a middle ground more along the lines of a Mutualist Society....sort of Libertarianism without the Ayn Rand social and economic Darwinism.  However...what ever we come up with we will fuck it up in a couple of hundred years or less and degrade to the only natural human condition we have ever known and that is serfdom. 

It may be serfdom to a corporate head in a suit rather than a monarch or a fellow citizen who is "more equal" than the rest of us.  And we may willingly go into that serfdom because we are given the opportunity to acquire  so much more shit  to distract us from the fact that we are once again merely serfs.

But serfdom we have and more serfdom here we come.  The only difference between you and I is you still cling to the deluded notion that if you have freedom you might be able to aquire enough stuff and money to insulate you from the fact that you are a serf.

I....on the other hand....am smart enough to know my place in the world and can make peace with it and...to paraphrase Timothy Leary...

Turn Off

Tune Out

Drop Off

And let you fuckers uselessly blather on about....Right and Left....Government and Freedom.....BLAH BLAH BLAH.

Sat, 05/26/2012 - 18:01 | 2466087 Xkwisetly Paneful
Xkwisetly Paneful's picture

"But if there is this much blatently proveable evidence of massive corruption every single day in a highly regulated market imagine what that human corruption would do in the hearts of most men but particularly those at the seats of financal power would do if their chains were completely unfettered."

-That's not big government is my friend?  Are you on meds?

It always ends in populist revolution. It always starts smaller, less restrictive and ends with bigger and oppressive until there is none.  I'd love to hear how'd you fuck it up worse than the perpetual outcome sorta like I would love to hear the markets called "highly" regulated again. Unless it was sarcasm as in they are stoned out of their minds or something.

Sat, 05/26/2012 - 19:28 | 2466150 Jumbotron
Jumbotron's picture

*** Sigh  ***

Let me try one more time.

Let's disect what I said here......

"But if there is this much blatently proveable evidence of massive corruption every single day in a highly regulated market imagine what that human corruption would do in the hearts of most men but particularly those at the seats of financal power would do if their chains were completely unfettered."

Now....once again....show me where I said that big government is my friend...or the portion of this statement that convinces you that I like big government.  I am assailing your belief in the unfettered market and in the context of your orginal statement that set me off in the first place that what the HTF algos represent is the free market...which is patently bullshit.

I tried to appeal to your common sense....which I know now is clouded by your religious beliefs...and trust me....your unfettered market tainted Libertarianism in your case is a religion for you.....however, I tried to appeal to your common sense by framing the siutation at hand which is  more regulated now that in your utopian scenario and what would happen if the market was truly "FREE".

It is simply an exercise to show you the fultility oin both the liberal big government argument and yours coming from the Libertarian and /or Conservative side of the politcal/economic spectrum.

And as far as "fucking things up further"  I never said that as well.  Once again read my post without the blinders of your fundamentalist mindset.  I stated that no matter what system we go back to, or perfect, invent new out of whole cloth or modify... the end result will always be the same. 

Epic Fail.

Sun, 05/27/2012 - 00:15 | 2466677 Arrrr
Arrrr's picture

"imagine what that human corruption would do in the hearts of most men but particularly those at the seats of financal power would do if their chains were completely unfettered."

"your unfettered market tainted Libertarianism in your case is a religion for you.....however, I tried to appeal to your common sense by framing the siutation at hand which is  more regulated now that in your utopian scenario and what would happen if the market was truly "FREE"."

Oh, that's easy. They would fail, go bankrupt, and be liquidated, as opposed to now. 

They would be liable to torts, not protected by statute, as they are now.

Legalized cartels based in rent-seeking would disappear. 

The only utopian situation here is the one you're depicting - that monopoly goverenment, with it's unique power in society to aggress without consequence, will not have it's regulatory power corrupted to aid financial industry criminials instead of attack them.
In free markets, bad decisions have their own consequences. In ours, the effects of the consequences are transferred. Socialize the costs, privatize the profits - it's the American way.

Your defense against the other poster that you don't like what you imagine "big government" to be is irrelevent. The difference between what you agree with and what "big government" would be, are only a matter of degree. The thing that is actually different - actual free markets, where failures are punished by the market, you scoff at.

In a real free market, no company wants their stock on an exchange that is crooked. Way too much risk! If a crooked exchange were caught, in a free market, you'd see new trustworthier exchanges launch. In our crooked system, the regulatory costs to competing with nasdaq or nyse are what make it prohibitive.
 

Sun, 05/27/2012 - 14:08 | 2467366 Jumbotron
Jumbotron's picture

STOP RECITING A TEXTBOOK WHICH SOME UTOPIAN WROTE SEVERAL HUNDRED YEARS AGO (Adam Smith)

Are you as Xkwisetly stupid as Xkwisetly Stupid?  Or cosmically ignorant or just both?

LISTEN UP JUNIOR !!!  UNTIL YOU OR XKWISETLY RETARDED OR ANY OF YOU USELESS LIBERTARIANS COMES UP WITH THE SOLUTION TO THE CORRUPTED CONDITION OF THE HUMAN HEART, THEN WHAT WE HAVE HAD IN THIS COUNTRY SINCE THE MOMENT ALEXANDER HAMILTON HAD THE BRIGHT IDEA OF A CENTRAL BANK JUST MOMENTS ON THE COSMIC SCALE AFTER THE FOUNDING OF THIS COUNTRY HAS BEEN AND FOREVER SHALL BE THE CLOSEST TO THE "FREE" MARKET AS WE WILL EVER HAVE.

WHICH IS PRECISELY WHY WE HAVE GOVERNMENT IN THE FIRST PLACE....TO ENACT THE VERY LAWS TO CONSTRAIN SUCH CORRUPTION IN THE "FREE" MARKETPLACE IN ORDER TO HAVE A "MORE PERFECT" MARKETPLACE.  BUT WHEN THAT SAME SAID CORRUPTION EXISTS IN THE HEARTS OF THE POLITCIANS WHO MAKE THE LAWS FOR THE BENEFIT OF THEMSELVES AND THOSE WHO IN THE "FREE" MARKETPLACE FOUND THEMSELVES AT AN ADVANTAGE BY METHODS BORN OF THAT VERY SAME CORRUPTION, THEN WHAT FINAL USE IS ANY OF YOUR SILLY AND USELESS BLATHERING ABOUT FREEDOM AND "FREE" MARKETS AND THE SOVERIEGNTY OF MAN?

YOU WANT FREEDOM.....FREE YOUR MIND OF THE SELF DELUSION WHICH STATES THAT YOU ARE ANY DIFFERENT FROM THE POLITICANS AND THE CRONY CAPITALISTS...OR IN PARTICULAR THE SOCIALISTS AND THE LIBERALS YOU SAY YOU DESPISE.  WHERE THE FUCK DO YOU THINK ALL THESE SCHMUCKS COME FROM YOU FUCKING IDIOT.....THEY COME FROM US.

LIBERTARIAN PHYSICIAN....HEAL...THY....SELF.

AND UNTIL YOU DO, PLEASE DO US ALL THE FAVOR OF SHUTTING THE FUCK UP !

Sun, 05/27/2012 - 17:02 | 2467627 Cathartes Aura
Cathartes Aura's picture

while I'm not overly fond of most shouty posts, your points being made resonate with me, and I'm one of the upvoters.

UNTIL. . .ANY OF YOU USELESS LIBERTARIANS COMES UP WITH THE SOLUTION TO THE CORRUPTED CONDITION OF THE HUMAN HEART. . . WHICH IS PRECISELY WHY WE HAVE GOVERNMENT IN THE FIRST PLACE. . .THEN WHAT FINAL USE IS ANY OF YOUR SILLY AND USELESS BLATHERING ABOUT FREEDOM AND "FREE" MARKETS AND THE SOVERIEGNTY OF MAN?

YOU WANT FREEDOM.....FREE YOUR MIND OF THE SELF DELUSION WHICH STATES THAT YOU ARE ANY DIFFERENT FROM THE POLITICANS AND THE CRONY CAPITALISTS...OR IN PARTICULAR THE SOCIALISTS AND THE LIBERALS YOU SAY YOU DESPISE.  WHERE THE FUCK DO YOU THINK ALL THESE SCHMUCKS COME FROM YOU FUCKING IDIOT.....THEY COME FROM US.

this is what I find myself nodding along to - and (for me) it is not really directed at any speciific political belief systems, they are all "idealistic" in verbiage, and "unrealistic" in practice, because they do not take into consideration the state of the "human heart" as you refer to it.

as long as we labour with grasping greed, with those who "see" those with more monies & power as something to aspire to because then THEY will have the monies & power - we're fuct.

and so, "free your mind" stay honest within yourself, in all inter-actions with others, pay attention, trust your heart (gut, whatever).

great rant Jumbotron, call it as you see it.  bravo!

Sat, 05/26/2012 - 12:59 | 2465539 williambanzai7
williambanzai7's picture

QUEEN OF HFT

Sat, 05/26/2012 - 13:22 | 2465592 Sisyphus
Sisyphus's picture

It must be really cold in the control room.

Sat, 05/26/2012 - 13:56 | 2465689 RacerX
RacerX's picture

yeah she's gonna poke someone's eye out with those things.

Sat, 05/26/2012 - 14:19 | 2465734 francis_sawyer
francis_sawyer's picture

you'll poke your eye out kid...

Sat, 05/26/2012 - 15:38 | 2465835 Angus McHugepenis
Angus McHugepenis's picture

Ooohhh... calling Tokyo (both hands adjusting radio dials).

Sat, 05/26/2012 - 14:24 | 2465743 The Monkey
The Monkey's picture

One of the most humorous aspects of the Facebook IPO.  The relative valuation arbitrage opportunity blows up.  Leading up the the IPO, all kinds of bets were made that sector stocks would trend upward on relative P/S comparisons and potential for M&A.  This was the trade du jour during the internet bubble & the fact this type of speculation is still happening is very telling.  The mania for speculation is still alive and well in spite of the, ahem, "headwinds" facing the world economy.

To make the sentiment backdrop even more ominous, consumer sentiment hits a 5 year high.

 

 

Sat, 05/26/2012 - 13:37 | 2465633 overbet
overbet's picture

butter face

Sat, 05/26/2012 - 13:03 | 2465548 AmCockerSpaniel
AmCockerSpaniel's picture

Ah; It's just a "Rogue Algo", and not bad bankers again. I've been taught that it's the guns that kill people, and NOT people killing people. So this makes sense to me. I'll be able to sleep tonight knowing TPTB are out there making the market safe and fair.

Sat, 05/26/2012 - 13:28 | 2465601 Jacque Itch
Jacque Itch's picture

So the banks can front run trades, rape the retail investor,  boosting their bottom line and saving our gorgeous economic system as we know it!!!!!

 

Sat, 05/26/2012 - 13:29 | 2465611 overbet
overbet's picture

Certainly a fuck job! How much can people take before they are truly fed up?

Sat, 05/26/2012 - 13:33 | 2465622 q99x2
q99x2's picture

Middleman. Varmints in the grain. Parasites. An opportunity for taxation.

Sat, 05/26/2012 - 13:51 | 2465677 Sequitur
Sequitur's picture

From the point of view of the exchanges? HFT = money. Because HFT is a huge percentage of market action, NASDAQ makes most of its money from HFT. That's why, when asked about HFT's role in the Fuckbook fiasco, NASDAQ refused to answer the question.

Sat, 05/26/2012 - 13:52 | 2465681 DavidC
DavidC's picture

I've posted a bit further down as well, Joe Saluzzi and Sal Arnuk's book Broken Markets is due out in the next week or so, discussing the whole HFT and Algo subject.

http://www.brokenmarkets.com/

DavidC

Sat, 05/26/2012 - 14:30 | 2465750 GernB
GernB's picture

What is the justification for one buyer or seller knowing how many shares are being bid and aked across all price levels? Theres no purpose for knowing the instantaeous market depth to the fundamental investor. Its only useful to market timers and its not information they need.

Sat, 05/26/2012 - 15:01 | 2465785 RoadKill
RoadKill's picture

Better question - what is your justification for banning it or regulating it. This has 0 impact on LT investors. If you were in for a flip then you deserve what you got.

This is America. You must have a Constitutional rationale for why the government has the right to tell me how to buy and sell stocks. An algo is no different then me telling Etrade how to buy and sell during the day.

All you so called "capitalists" and freedom lovers that want the government to get involved vs your pet peeves are as annoying as the Commies in office

Sat, 05/26/2012 - 19:51 | 2466261 neidermeyer
neidermeyer's picture

That's an easy one ,, let me hit it out of the park for you...

 

1.) It's abusing the system (some would say gaming the system) to gain information that would not and should not be available to that entity... submitting tens of thousands of bids and cancelling them all in milliseconds?

2.) It's abusing all other investors by inserting bids/offers upstream of the normal network order flow ... using the milliseconds of network delay that everyone else has against them...

3.) It certainly does affect long term investors by making it a market of trying to anticipate what some 25 year old computer geek punk at GS has programmed today rather than did company XX's new product sell as good as it seems to... It keeps long term investors out and don't tell me that isn't a real effect... What's the volume been like lately?

Sat, 05/26/2012 - 21:13 | 2466407 mendigo
mendigo's picture

So for example all those long term value investers in fb were screwed, right?

Sat, 05/26/2012 - 15:53 | 2465862 stocktivity
stocktivity's picture

http://www.usatoday.com/money/economy/story/2012-05-26/spain-bankia-fina...

"The president of Bankia tried Saturday to calm fears about the future of the bank, saying Spain's second largest mortgage lender will emerge as a solid financial entity after it receives €23.5 billion ($29.5 billion) in state aid in the country's biggest-ever bank bailout."

 

Wasn't this total just $19 Billion 24 hours ago...up from $15 billiuon 48 hours ago?

Sat, 05/26/2012 - 19:57 | 2466275 mendigo
mendigo's picture

I can't imagine that an algo can take control or take down an exchange - the algo makes queries or place orders. The exchange handles the requests as rapidly as it can - but wether to process the request is up to the exchange, I would think. Exchanges cater to hft because it brings in dollars I suspect.

HFT reduces friction and sometimes crashes the market Similar t o day trading and derivatives and buying on margin.

Sun, 05/27/2012 - 09:15 | 2466973 Tsukato
Tsukato's picture

Online I found a list of "bad words" which red flag emails, texts, etc. by the authorities. I thought to myself " most people are too afraid to ever rise up against the man, but perhaps there is some passive-aggressive action that most people could be bothered to do, and could keep the g-men busy/overloaded". This list of words should be spread to everyone, and attached at the end of every message we all write online, during chat, emails, etc. Please take this list, and pass it along to everyone you know. Thanks and vaya con Dios. Here is where to find the list: http://www.dailymail.co.uk/news/article-2150281/REVEALED-Hundreds-words-...

Sun, 05/27/2012 - 17:10 | 2467641 Cathartes Aura
Cathartes Aura's picture

ZH had a couple of posts and threads dedicated to just what you suggest a couple of months ago, you could check the "back pages" - some very funny, creative posts, The FourthStoogin in particular if I remember correctly, and others.

it's getting beyond satire of late, isn't it.

Sun, 05/27/2012 - 09:35 | 2466993 HAL 9000
HAL 9000's picture

Let me put it this way, Mr Amer. The 9000 series is the most reliable computer ever made. No 9000 computer has ever made a mistake or distorted information. We are all, by any practical definition of the words, foolproof and incapable of error.

Sat, 05/26/2012 - 12:16 | 2465442 GMadScientist
GMadScientist's picture

Sad Icarus,

unable to discover

the price

of his mistakes

falling into pools

of dark "liquidity"

Zuck You, Bitchez!

Sat, 05/26/2012 - 12:16 | 2465444 Mattress Money
Mattress Money's picture

I keep my money in metals and  cigarettes (MO) , tech stocks are for gamblers!

Sat, 05/26/2012 - 12:21 | 2465451 bnbdnb
bnbdnb's picture

I'm sorry, the fact that the trading systems even allow this....its plainly stupid. Nothing else to say.

Sat, 05/26/2012 - 12:27 | 2465464 Racer
Racer's picture

the HFT's will be hoisted by their own petard, just give it... a little... more time!

Sat, 05/26/2012 - 12:28 | 2465467 lenitivelea
lenitivelea's picture

as if it wouldn't have spiked and crashed anyway. 

Sat, 05/26/2012 - 12:40 | 2465471 ToNYC
ToNYC's picture

Clyde Barrow praised the new 1934 Ford V-8 in a letter to Henry Ford because he could stop at a rural bank with slow real people and drive off with as much cash as was available at that time with a faster car than the police.

HFT is the new '34 Ford V-8.

Wake up to the old way; there's nothing new under the Sun; just another chapter in the jungle book.

Jaime Dimon is the new Clyde Barrow. This time he's got a lot of Bonnie Parker-like Goldies riding shotgun on the William Jefferson Clinton Freeway..

Sat, 05/26/2012 - 13:53 | 2465683 Vince Clortho
Vince Clortho's picture

Don't forget Pretty Boy Corzine.

Mon, 05/28/2012 - 12:02 | 2469397 Ident 7777 economy
Ident 7777 economy's picture

 

 

My fave; Satan with a comb-over ...

 

Sat, 05/26/2012 - 12:31 | 2465473 The Big Ching-aso
The Big Ching-aso's picture

 

 

I'm wondering if Al Gore is gonna take credit for this trading system.  'Al Go'.  Just too coincidental.

Sat, 05/26/2012 - 12:31 | 2465475 kahunabear
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Or maybe it just went down because it sucks.

Sat, 05/26/2012 - 12:35 | 2465479 The Big Ching-aso
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If a naked Arnold Schwarzenegger looking dude shows up on Wall Street I'm gonna start worrying 4 sure.

Sat, 05/26/2012 - 13:42 | 2465655 Tijuana Donkey Show
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I have come from the future to save the facebook IPO. Come with me if you want to pop.

Sat, 05/26/2012 - 12:39 | 2465485 Zero Govt
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it stayed up above $38 on launch day having twice tried to tank below but was 'held up' (the amazing levitation act above $38 was amusing to watch) but they're worried not about that rigging but the drop next days where the market price was revealed

Sat, 05/26/2012 - 23:31 | 2466626 mendigo
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Exactly.
Clearly there is good manipulation and bad manipulation.
That stock is still being floated.
The was article on mw today questioning if the flopbook ipo will tank the economy!
I suspect etfs are using opm to float that pos.

Sat, 05/26/2012 - 12:36 | 2465480 SonOfSoros
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This is why I don't believe in Algo trading. A mere program does not have the intelligience to replace a real human trader.

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