Tabb Forum released a video today focusing on order-types in relation to HFT. Tabb's research director highlights that regulators are still unsure about what to do with HFT.
Perhaps it's time we do what is in our power to help our "elected representatives" better understand HFT. There are three key publications we can tap into that are recent and have been praised for their accurate depiction of today's markets, one of which has its foreword written by former Senator Ted Kaufman:
Personally, I will be sending a copy of each with a lengthy personal letter addressed to my reps. If you are feeling as frustrated as many of us are perhaps you will do the same. Each publication is loaded with accurate material, each covers its own separate and specialized topic, they're cheap enough to spare the coin for, and structured in a way that if Congress and the US Senators read them they will have a broad understanding of this fragment market. There has been more moderated forums & discussions on HFT in the private arena than in the public one which is problematic because regulations are not passed through the private sector.
There is reason for concern among us as our questions constantly go unanswered by regulators and our observations discounted because of others inability to understand complex relationships. Like many of the topics covered around the world, this is a battle of information. Zerohedge's mission statement demands us to facilitate information's unending quest for freedom and to liberate opressed knowledge. Many of us go beyond just writing and we are asking for your help to organize a movement for financial reform and to help us reach Senators and Congressmen that are beyond our geographic location, as the probability of one of them pretending to listen improves if you're a constituent.
The main focus here should be the exchanges transparency (which is an apparent oxymoron as those schleps don't even know what is going on) when it comes to order types along with the speed at which multiple data feeds are updated. Couple that mess with media outlets feeding data to premium subscribers and you have a market heavily slanted to the negative side. All this mixed in with special order types designed to skirt the accepted rules of the game and we have a untrusted, broken market in the pot.
And now it's on us to mobilize and make sure at least one of us in each district contacts our representatives and do what we can to inform them of the state our financial markets are in. These are not topics we would expect them to understand given the esoteric realm in which it exists in relation to the world a DC politician lives within. The longer this goes on, the more bad algo's will manipulate the system and rig profits in their favor, skirting the very laws that wind up resulting in those goddamn FINRA bans for the human traders without the deep unethical pockets like their bad algo competitors. All this will continue while the SEC burns millions on chasing down Stevie C under the direction of the Mary Jo White, Tabbi's Fox in the Hen House.
Hold Brothers own boss decided to fund and operate an inside spoofing strategy through Holds own Grey Box shitware and guess what? They are still operating as a broker/dealer, paid a $5.9MN fine, and make sure to hid their tracks better going forward. We have ample evidence of the magnitude of the frauds being perpetrated given the new dynamics of our exchanges. A few quotes I noted last week in The Problem of HFT:
The benefit of speed
The truth about the technological arms race was that, although speed mattered, you could only reap the benefits if you knew what special order type to send and when to send
The benefit of converting another traders order
unfair conversion of investor orders eligible for maker rebates into unfavorable executions incurring taker fees
How beholden we are to trust any of the given exchanges transparency
The more one studies the exchange documentation, in fact, the more apparent is our dependency on the discretion of the exchanges to inform individual customers of the features that have material impact on execution performance and the intended usage scenarios of such features
If you agree with us on the need for financial market reform, collect those three books and write a letter to your representative addressing the problems you see that go beyond the day traders and hit on market structure, participant integrity, following the laws already passed, and having a regulator enforce the rules it has in place.