High Frequency Trading

High Frequency Trading
Tyler Durden's picture

Chicago Federal Reserve Joins Zero Hedge In Warning Over Threats From High Frequency Trading





"A handful of high-frequency trading firms accounted for an estimated 70 percent of overall trading volume on U.S. equities markets in 2009. One firm with such a computerized system traded over 2 billion shares in a single day in October 2008, amounting to over 10 percent of U.S. equities trading volume for the day. What are the advantages and disadvantages of this technology-dependent trading environment, and how are its risks controlled?... The high-frequency trading environment has the potential to generate errors and losses at a speed and magnitude far greater than that in a floor or screen-based trading environment." - Chicago Federal Reserve

 
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Latency Arbitrage: The Real Power Behind Predatory High Frequency Trading





A new white paper out of Themis Trading analyses the impact of predatory algos comprising various HFT strategies. In Themis' view: predatory HFT generates $1.5-$3 billion in profit. Themis concludes with the following three market integrity questions:

1. Instead of belittling the impact of latency arbitrage, and representing it as a gloriously naive $0.01-$0.02, does the regulators' thinking change if that impact is as high as $3 billion a year?

2. In a quid-pro-quo worlds, are market centers merely charging HFTs a higher fee in exchange for an advance look at the NBBO? Market centers should be protecting all participants equally.

3. The most critical question: "When a market center provides an HFT the ability to out-maneuver institutional orders, is not the exchange putting institutions and their brokers in breach of their fiduciary responsibilities, especially those institutions managing pension funds governed by ERISA?"

 
Tyler Durden's picture

Do It Yourself High Frequency Trading





As the only way to make money in this market is to mimic the big boys and to churn stock after stock (especially those with massive short interests) then closing 100% in cash at the end of every day, it was only a matter of time before someone started pitching the very same product that Comedy Central's Cash Cow highlighted is a sure way to make gobs of free money, to retail investors. That this someone happened to be Lime Brokerage is probably not very surprising.

 
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The High Frequency Trading Debate Gets Down And Dirty





"Meanwhile, every 20 milliseconds "HFT-Quants" are taking another "too-dumb-to-stop-trading" little investor trapped in the illusion that Fannie, Freddie and AIG will "be worth something, someday." "HFT-Quants" don't think long term. Their algorithms think in milliseconds, just enough time to skim more money from all the 'dumb money' out there." Paul Farrell, MarketWatch

 
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Why The SEC Is Irreperably Conflicted On The Issue Of High Frequency Trading





Dear Senator Kaufman, we at Zero Hedge applaud your effort to bring transparency to, and evaluate the various new forces that, for better or worse, determine the modern market landscape. However, we would like to bring to your attention a fact which renders your entire approach of seeking fair and unbiased commentary from the SEC irrevocably moot. The reason is that the SEC, in alignment with many of the very industry players who may be abusing market structure for their own tiered benefit, stands to benefit significantly from an increased amount of daytrading volume across all markets, and, in fact, based on actions as recent as 4 months ago by the SEC, the regulator is well aware of the monetary benefits that ever-increasing churn creates for the commission and is fully intent on capitalizing on them. We thus suggest you bypass any protocol that has an SEC intermediation and go directly to penning a Bill which, we trust, will prove to be more fair and objective than anything the SEC would ever provide you with. The reason for the SEC's insurmountable conflict of interest is the so-called Section 31.

 
Tyler Durden's picture

High Frequency Trading Roundtable





Yet another good introduction for the novices in the field. Keep in mind the various participants have extensive interests so read between the lines.

 
Tyler Durden's picture

Goldman Sachs Clarifies Its High Frequency Trading Practices





"In response to recent media stories on High Frequency Trading, we wanted to clarify our position to clients."

 
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Whitney Tilson And High Frequency Trading v3





Whitney Tilson continues investigating High Frequency Trading

 
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The Cost Of High Frequency Trading





Lately, as the topic of High Frequency Trading has gotten front page prominence, there has been much confusion as to the top line impact on traders that utilize HFT methods, and inversely how much of a "toll" on investors high frequency trading is. In other words: what is the cost of liquidity?

 
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Goldman's Ed Canaday On The Requirements For High Frequency Trading Oversight





Damage control... Or is Goldman a little worried what Direct Edge may disclose.

From the appended Schumer piece on Bloomberg:

“Goldman Sachs believes high-frequency trading should have an accompanying obligation to provide liquidity, and be subject to appropriate regulatory oversight,” Canaday said.

Ed, we have been giving you the chance to provide your side of the story for months. Please take us up on the offer.

 
jester's picture

High Frequency Trading and Systemic Instability





HFT creates systemic instability and makes market manipulation much easier.

 
Tyler Durden's picture

Critical Response Against High Frequency Trading Starts Generating Momentum





Zero Hedge recently had some choice words against a subset of HFT, namely Flash Trading, and as even Irene Aldridge confirmed earlier, there is something very wrong with that subset of program trading. It seems our admonitions have fallen on the right ears. In a startling development of anti-establishmentarian activism, Senator Charles Schumer has asked the SEC to ban Flash Trading in its entirety, as it "gives high-speed traders an unfair advantage over other investors."

 
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Bloomberg's Pimm Fox On High Frequency Trading





First Goldman, now High Frequency Trading... The media onslaught is converging.

 
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Whitney Tilson Probes Deeper Into High Frequency Trading





"Lots of feedback on the high frequency trading issue"

 
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