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Will Penson Cash Vaporize Gentle Into That Good Knight?
First MFG; then PFG; and next KCG? A little over two months ago Knight Capital, the well-respected brokerage house, purchased a 'floundering' futures brokerage - Penson Financial Services. The de minimus $5mm that Knight paid on May 31st for the firms meant (implicitly) that the $411mm of customer funds became 'useful'. With various firms pulling lines and the math underlying Egan-Jones downgrade, it is natural that an investor would be anxious to ensure that all their hard-earned deposited segregated accounts are, well, still segregated. Have no fear though, as Bloomberg reports, CME, which regulates Knight's futures business, is "monitoring the situation". An advocacy lawyer for MFG/PFG clients noted: "Those at Penson should be a little worried;" and so while KCG "actively pursues its strategic financing alternatives to strengthen its capital base" - read D.I.P. plans - one can't help but wonder whether all that shiny customer cashola is burning a hole in their capital-deficient pockets. It would seem at $2.27 per share, a few others are wondering that also.
P.S. While the rogue algo that took Knight down to Chinatown may have been switched off, it appears its ever-ready competitors forgot to turn theirs off - as NANEX provides (once again) clear evidence of the wondrous market-making/eating algos feasting on the carcas of freshly damaged capital to the tune of 1000s of trades per millisecond occurring...
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Knight Fever
I can't think of a COCKSUCKER more trustworthy to whom I would entrust my money than to the "Honorable" Jon Corzine.
Hey Jon, your orange jumpsuit and prison cell are all ready.
http://www.zerohedge.com/news/knight-ceo-comments-algo-failure-which-has...
LOL.
EDIT: Sorry Mr. Pendergraft. It's probably over now. Good Job!
Employees say
"monitering the situation", aka Stealing!
Dont worry, your funds have been segregated - from you!
It will take, what, another day or two before we see if Knight is yet another pack of thieves like their brethren at MF Global and PFBest. Does JPM have any of Knight's money, hmm...?
Hey! I'm enjoying the blog posts. You're doing a good job.
On this Knight thingy... They'll never let it be known who the individual people are who are responsible. Letting the public see the pimply-faced high school grads who are at the switch wouldn't instill much confidence in the markets. And confidence is just about all the markets run on these days... and that's getting pretty thin.
That's confidence Rocky.
Not much of it at Knightmare Kapital Korp. these days...
Based on the old, "One time is random, two times is a coincidence, three times is a conspiracy" rule, does anybody else get the feeling that the Futures industry is being deliberately targeted for destruction?
That would be interesting given that the futures market is critically important to the operation of the agriculture industry.
And you know what Kissinger said about controlling the food supply...
when tomorrows
are doubtful....
the futures markets
are irrelevent...
The software development of these trading platforms was probably outsourced to India long ago. You get what you pay for.
Does a black bear shit in the woods?
don't know about
my black bear breathern
but i poop
where ever i want ..
Your exactly right, they didn't go to "investigate" until today. I think the money is gone, and here's why. Ask yourself why would Knight buy a struggling brokerage that was on it's last leg for 5 million (pennies on the dollar)? It wanted that 411 million in customer money in the segregated accounts. I've always said that MF global wasn't the only one that was doing what it did and it turned out PF was one and it will turn out Knight is one also. It doesn't make sense for that "program glitch" to have the company lose 70% or more of it's value in less than 36 hours and continue to lose overnight. It's bedcause people who know how the game is played on Wallstreet know that Knight had to have used that client money and with them having a new market cap of less than 200 million they can't get a loan to put the money back if they wanted too.
Remember why would Knight pay 5 million dollars for a struggling brokerage?
It seems that lately this song is stuck in my head more and more.
Uriah Heep - Stealin
http://www.youtube.com/watch?v=g3VCfCsX5Yo
Maybe we can turn it into Corzine's theme song?
<<"monitering the situation">>
paper shredding and erasing hard drives as fast as possible....
Corzine will be called in to monitor. Geithner will check their tax returns. Holder will decide if prosecution is needed.
No problems. We are all in good hands.
"Cost Savings by Rotation"
I saw so much of that. But they all do it. And they all fail, not always because of broken systems. Normally because it's the broken culture that causes the broken systems, and also, broken risk management, broken fiduciary duty, broken management, etc.
they replaced the americans with H1-Bs this is what you get.
Knight Rider
give money to KITT. the car has mobile high frequency trading module built in.
I'm afraid I can't do that Michael.
Don't expect anything to be done about that
CORZINE CRONYISM BOMBSHELL - High Ranking DOJ Lawyers And AG Eric Holder Were Partners In Firm That Represented MF Global
Recycle the "things were really hectic around here during the last few days" excuse.
Black Knight instead of Black Swan.
Scadoosh.
Looks like they are going after any company that ends in "G"
OM"G"
Knight's last throw of the dice is furiously defending fb in the 19's
Ya think? ... I think they are selling their FB shares as fast as human-bot-ly possible
Sell at the market price
They ain't monitoring shit.
Vaporized!
If you can't hold it in your hand or stand in front of it and defend it you don't own it.
Haven't we learned that "segregated accounts" is, hmm, segregated until accounting moves the money elsewhere?
Jim Crow is dead - there ain't no segregation no more
well played. nice.
Accounting doesn't "move" anything. Just playing around with settlements that have no net accounting impact. See? All legit.
It's hard to segregate vapor...unless you have a vaporizer (which are fabulous by the way).
Who is in charge, Mary Schapiro or my Superfriend Gary Gensler?
would I yes to say yes.....
"Would I say no to yesterday, or yes to knowing at all?"
We bought 100,000 shares of KCG at $2.30.
are you holding after 10% + gains or selling?
Yeah! Sure you did...
Why?
You show us the trade ticket.
We won't call you a bullshitter.
@slaghterer. Didn't you say yesterday the loss on this was capped at $150 million? Forgive me if I confused you with some one else.
It's now at $1.85 on heavy selling volume in AH...but let me guess..you already sold for a nice profit...right?
You and robo should date.
ha ha flame so more I can take it.....bot 300 sept 4 calls sold 300 sept 5 calls for .20cents I will watch it burn..cause I feel the company will survive....
Tyler ZH said the same thing about Jefferies.......i bot that dip long 30,000 betting tonight Wall Street and Nite Partners save the day....
Too bad you didn't go long MONsanto during the Vietnam War. I hear they made a killing (literally) on Agent Orange.
And now they "make" our food. Ain't that comforting?
with 2 decades of enough BSTpus in the milk to make your dick fall off
(he won't need an axe)
If I remember correctly it was Tyler's attention to Jefferies book that forced them to take action. But if you want to take a chance on a penny stock after two firms just vaporized, by all means go for it. Bet the ranch.
group think
"group think"
"i bot that dip long 30,000 betting tonight Wall Street and Nite Partners save the day.."
It won't be long before Jamie has it all safely tucked away under one roof.
You called?
Knight Capital Plummets, Looks to J.P. Morgan for LifelineRead more: http://www.foxbusiness.com/industries/2012/08/02/knight-capital-plummets-55-after-disclosing-huge-440m-pretax-loss/#ixzz22Q409hpr
By lifeline they mean - how can we give Jamie segregated accounts?
ok.. im gonna beat someone to the punch.. WHERES JON CORZINE? there!!
I own a few thou PNSN - never heard they were bought by Knight.
They sold PFF. It ended up in Knight's hands, IIRC.
OptionsHouse?
May 29th. It was just Penson Futures.
I have to wonder if those are the same accts that Penson got from MFG?
A game of hot potato like no other.
FCM = DOA
off topic but did anyone see that 137.7 print on the SPY at 3:25? Algomania?
Update: I'm seeing weird prints in other stocks at the same 3:25 mark. Anybody else?
Will it? Odds are it already has.
Won't this be the third canary this year to drop dead in the segregated coal mine...?? I losing count
That algo chart in just one word:
EPIC
deleted
So, 2 months ago they got their hands on $411Million and yesterday they lost $440million ... uhm ...
surely it must be a coincidence. after all, they would never rob clients intentionally...
but money does have a way of just...vaporizing. so....
A picture perfect scene of the "Night Rider" driving off into the sunset.
http://www.youtube.com/watch?v=Mo8Qls0HnWo
Massive Run on futures accounts unfolding now! MF Global gone... PFG Best gone.. Who's next?
Won't know till it's shark feeding time again. Consoilation Bitchez! Gotta keep TBTF BIG.
It has something to do with consolidation.
It has much more to do with playerz realizing that you can just walk in and take other peoples' money, if you are a market maker or broker. MFG did it. PFG did it. These guys will do it, with both hands, and probably did last week.
It's just money for the taking, sitting there in an account that you can open at will. Take the money and gamble with it, buy hookers and blow whatever you want to do, what's the worst can happen? You spend 2 hours sitting in Congress telling them how sorry you are, and you walk away with all the money.
No money handler worth their salt would not take this deal. In a New York minute, with both hands.
"You spend 2 hours sitting in Congress telling them how sorry you are"
"Yes sir Mr. Congressman/Senator I'm dumb and incompetent and really didn't know what was going on..."
Congressman/Senator: "Well I say there boys and girls, we all know our former colleague/former business associate/huge contributor etc. is an honorable man..."
Many of the Muppets seem to want to buy into that excuse everytime, those in the know/those involved make sure to try to push it in that direction. I call it the Occam's Razor rationalization. Keeps the crooks out of prison, and it also applies in other non-financial scenarios.
You know whats so weird, is if knight's algo goes and there is 15% of "liquidity" gone and the market trades fine... then the whole myth around hft is killed, there is nothing left to hide behind for the hft lobby.
My thinkorswim trades through Penson....
CME is monitoring it? Monitoring what - to makle sure that the cash is perfectly vaporized without any trace? Fuck - with CME on top of this - my cash is as good as gone.
Short squeeze into the close. Get long.
SP500 cannot have two losing days in row. If it does, someone is getting fired over at the Treasury or the Fed. They already tuned their algos to pump it to the upside. Looking for a lively action overnight.
Sure starting to look like a trend.
PS: The funds were already vaporized. Only accounting gimicks cast the illusion that something tangible actually existed in the first place. Sort of like a glass jar with a picture of cookies on the side of it. Just don't reach in hoping to actually get a cookie.
you would think on a day like today they would shut down the algos for the late day manipulation "yea you think this is a free market you suckers" ramp.
I wonder... will Homeland Security open fire on the farmers when they all decide to take-over DC and Wall St. with their tractors?
After all, the few remaining independent farmers are nearing a point of nothing left to lose but their life. All in a time of rising crop prices, at that.
http://www.nydailynews.com/news/national/vermont-farmer-crazy-smashes-7-...
Morgue reporting in on Standby.
Squid tentacles Attached.
Bring out your dead!
http://www.montypython.net/grailmm1.php#Scene%202
It's 4 O'Clock on Wall Street ... MB "Do you know where your money is?"
Life support to be pulled in T minus 5 .... 4 .... 3 .....
we could never be so lucky !!!
Fuck! Looking at the Employees of Knight Capital through LinkedIn shows a huge amount of ex Barclay's employees. Barclay's employees during the height of the LIEmore scandal at least.
As well as exLehman and Merrill fucks.
Yup.. Little bit like squid fishing in the BOD of PD's and the ECB..
"monitoring the situation"
Translation: frantically trying to determine if they screwed the pooch. Again.
My bet is they did, and to the tune of about $400M in client accounts. Again.
Nobody will hang for this one. Again.
Of course somebody will hang for this!
It just won't be the guy(s) who are responsible.
That brown guy in the corner, Abdul, looks like a likely candidate. he better head back to Opiumstan before they sodomize him.
Who was the counterparty to walking the price a millisecond at a time?
good thing "hopey changey" cleaned all this mess up like he said he would in 08.. whew
The Knight Capital computer algorithm abortion yesterday is even worse than originally thought. The losses are being quoted now at $440 million. Egan Jones just downgraded Knight to junk CCC with this warning:
So Penson collapses and within a matter of weeks the firm that bought Penson collapses. MF Global. PFG Best. Who will be next?
And there are STILL people who are so stupid and so stuck in a normalcy bias / Stockholm Syndrome that they are emailing me asking how to open an account with me, or if I could recommend a good stock or futures broker. Heck, I had some sleazoid call me last week who - get this - said he started reading me back in November, was my number one fan, had listened to every interview I had done since, and wanted to know if I'd be interested in brokering and/or investing in a commodity pool that he was putting together to do call writing.
What does one even say to that level of cognitive dissonance?
Let me phrase this as bluntly as I can to hopefully nip any further inquiries in the bud:
DO NOT call me asking for a broker referral. The markets are dead and collapsing, and only a complete moron would expose money to the markets, either futures or stocks, at this point.
If you are one of those truly stupid people who is still trading stocks or futures and you get your money stolen, DO NOT CALL OR EMAIL ME whining about it. You're not going to get ANY sympathy. Since MF Global, the situation has been crystal, crystal clear. If you haven't totally exited the financial markets, then you are simply stupid, and there are consequences for being stupid.
Girls who go to frat parties dressed like prostitutes and then drink until they pass out get raped.
People who have money exposed to the collapsing, lawless, fascist financial markets get their money stolen.
Same thing.
DO NOT call me asking to open an account. This goes especially for people who claim to have been reading me since my Going Galt letter was published at ZeroHedge, was read on the air by both Limbaugh and Beck, and the subsequent Puplava and Schiff audio interviews, all of which totaled up to tens of millions of listeners. If you have been reading me since I went viral by SHUTTING MY FIRM DOWN, why, why, WHY would you email me asking to OPEN AN ACCOUNT? What exactly do you think "shutting down" and "ceasing operations" means? In all of those interviews when I have vociferously called for a total financial market strike, when I have repeatedly warned people to get their money COMPLETELY out of the markets, what do you think that meant? If you are so stupid that you don't understand what GET THE HELL OUT means, then you should not now and not ever be trading in any markets. There is a baseline intelligence requirement, and being able to understand one's native language spoken simply and clearly is that baseline.
If you are still, for whatever completely unfathomable and inexplicable reason, in the financial markets, get the hell out now, especially if you have an account that clears through Knight.
Oh, and for those of you who survive to the other side of this collapse and war and are charged with the rebuilding, all computerized trading, high-frequency trading and algorithm trading MUST be made illegal. In fact, I would recommend going completely old school back to open outcry markets. Orders can be entered and routed to the floor electronically, but must be executed BY HUMAN BEINGS.
You beat me to it.
This shit stinks so bad,
'but but but I know how to play this game, I won't get caught. I'm smarter than that, I'm a trader'.
I wonder how many sados are thinking this.
But they'll scoff at owning phyzz. Fuckin' LOL
Do you have a link to that Going Galt article on ZH referenced in your post? I'd like to give it a read, as it was before my time. Thanks!
El
http://www.zerohedge.com/news/entire-system-has-been-utterly-destroyed-m...
Oh, and for those of you who survive to the other side of this collapse and war and are charged with the rebuilding, all computerized trading, high-frequency trading and algorithm trading MUST be made illegal. In fact, I would recommend going completely old school back to open outcry markets. Orders can be entered and routed to the floor electronically, but must be executed BY HUMAN BEINGS.
I tend to agree. Markets exist to serve humans.
Good knight sweet prince.
"Vaporized" = code for "stolen by Edomites"
well.. in a way Ann called it last Nov.. kudos
Amen brother..
OK fair enough
So what the hell can you trust?
Is there anything out there left that you can believe?
The way you asked the question implies you expect a non-null answer.
But the answer is: trust no thing and no one. Period. Go forward without any faith.
Anything tangible shiny or fury looks just fine.
Man oh man we are so cooked.
wE HEAR YOU ANN:
http://youtu.be/KULM72PoaOo
Seg Funds are FAIL SAFE; http://youtu.be/-9R3w8wDrmM
well-respected...
@Tyler:
Do you think it possible that the "ma-functioning" algo was actually doing so on purpose, vaporizing money but into the hands of some other waiting algo?
Is that conceivable -let's say at a loss rate of less than 25%-, that one algo can pass money to another, through the "open" market?
Tyler might not have an opinion. But I do:
I suspect there was no malfunction at all, hence the reason they let it run for 30 minutes, destroying as it went. The problem was that two or more programs were at open warfare with each other, each trying to knock the other out of the ring, or to run faster and take advantage of the others' latency. The resulting thrash was probably furious even by their mechanical standards, but by human standards was nothing short of apocalyptic.
I have no real evidence for this, but I've predicted it for a long time. This is what it would look like, these would be the results, and I suspect that is what happened.
This is not a malfunction, it is a theft out in the open.
Maybe I did not make myself clear:
I'm wondering if it's possible for algo to pitch from one to another, i.e. that the vaporization on KCG's side wasn't condensing at random counterparties, but ended up (mostly) in the hands of a certain counterparty.
Unlikely, IMO. The software should not be able to identify which trade belongs to which trader.
However: if the cooperating trader could code their bids -- say, always bid with a certain sequence of offers, say $XX.5501 then $XX.5502 then $XX.5503, and then the next bid at any dollar increment ending in '5504' is the one to match, even if it is way out of line -- then they could easily play off of each other. This method is called "knock knock" in that it relies on a previously-agreed code of knocks before the desired operation is accepted without question.
You know, I wouldn't put it past them. You could probably move $10M a minute right through the exchange, into any pocket you wanted to, and nobody would notice. And if I could come up with that in 30 seconds of what-if, any of these bozos could too.
I would be surprised if there were not algorithms designed to specifically take advantage of traders like KCG.
Did Knight have their own software programming staff to write the software incorporating proprietary Knight trading algorithms? If so, how much expertise does a company like Knight have to properly develop and test software? It isn't easy to develop and test software to ensure that it will peform properly under all conditions? There are almost always unforeseen conditions that obviously cannot be tested for. It is important to have an independent test staff whose objective is to thinks of ways to break the software.
Also, with whose computers were Knight's computers executing the losing trades? Knight's algorithms caused them to lose $440 million to one or more other traders. Does anyone know who earned the $440 million in profits or is it spread too thinly to identify? Obviously, somebody took advantage of Knight's idiocy. I would sure like to know their name(s).
"First MFG; then PFG; and next KCG?"
Mmm, better get out of anything with a 'G' in its initials
Goldmans springs to mind first for some reason!
You mean GM too?
So far it's been smaller players (well except for CIO at JPM), leaves you wondering if it's only a matter of time before the next Lehman event.
Thanks for the warning! I'm pulling my money out of MFG tomorrow.
I'm in the process of closing out my account with a Penson brokerage at the moment, was hoping to wait until the next QE gold/silver ramp but oh well. About to find out how segregated that account really is, never thought I'd be lucky enough to be a muppet!
PS: We were warned, most recently, in the wake of PFG, that Penson is a house of cards.
Soooo....
According to the first line of this article, the moral of the story is "don't buy stocks whose symbols end with the letter G".
I'll have to read further to get some context...
So Freakin convenient that they install some trading software on a day that they know to be a big FOMC announcement.
So convenient like RBS computer systems going down (effecting Natwest, Ulster bank, and another)around when they get downgraded.
Somebody mentioned that before the market collapse of 2008 there were more system glitches happening.
Hm.