Yesterday was a bad day for the HFT lobby, after not one but two incidents which exposed the high frequency parasites doing what they do best, and perhaps only: rigging markets.
First, it was a Canadian HFT trader, Aleksandr Milrud who was busted for spoofing (which is "manipulative, high-speed stock trading in which a trader places non-bona fide orders to buy or sell securities and then quickly cancels them before they are executed, in order to artificially move the price of security up or down and to induce other market participants to buy or sell a security at a price not representative of actual supply or demand", something the NY Fed's Chicago JV partner has become an Emini master in).
And then as previously noted, it was the embarrassing bust of the HFT-favorite exchange, DirectEdge, which the SEC charged $14 million for continuing to engage in Hide Not Slide orders long after the practice was slammed in the press.
Of course, by now, between the Fed and the HFTs rigging everything, one needs a microscope to find even a single retail investor as what we began explaining 6 years ago - namely that the markets are rigged, manipulated and broken beyond fixing - is by now clear to everyone, and most would rather gamble at the most corrupt Las Vegas casino. After all the odds of actually winning are better there.
And since it would be laughable if its wan't tragic, we decided to make it even more laughable, by noting that none other than intellectual titan in the House of Representatives, Maxine Waters, had a few choice words to say about the latest HFT rigging busts. That's right: Maxine Waters now opines on market microstructure issues.
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Lynch, Waters Encouraged by Results of Securities and Exchange Commission Investigation of Direct Edge
WASHINGTON, D.C. – Today, Congressman Stephen F. Lynch (D-MA) and Ranking Member Maxine Waters (D-CA), two prominent members of the Financial Services Committee, issued a statement regarding the announcement that Direct Edge will pay a $14 million fine to settle charges by the Securities and Exchange Commission that they failed to disclose how some order types, created at the behest of high frequency trading firms, were being employed on their exchanges. Lynch and Waters applauded the SEC for taking action against the exchange for this fraudulent behavior, which catered to high-frequency trading firms to the detriment of average investors.
The SEC investigation found that the two exchanges offered three variations of “price sliding” order types, rather than the single “price sliding” order type listed within the exchanges’ rules. Certain members of the exchange, including some high-frequency trading firms, were privy to information on how the three variations of order types operated, while retail and institutional investors were not. Lynch and Waters believe it is crucial that all investors have equal access to the rules governing trading on the exchange.
“It is unacceptable to have high frequency trading firms wielding undue influence over exchanges. I am pleased that the Securities and Exchange Commission is finally acknowledging the abusive practice of complex special order types that cater to high frequency trading firms to the detriment of everyday investors. While the fine is an important first step in ensuring fair trading on our public exchanges, we must continue to hold exchanges accountable,” said Congressman Stephen F. Lynch.
“More than three years after being alerted by a whistleblower, the SEC has finally taken action against potentially abusive and manipulative order types that favor high-frequency traders over ordinary investors at our nation’s exchanges. Our capital markets are built on the premise that they are fair and transparent for all investors. As this case illustrates, providing certain customers with an inside track on how trades can be best executed destroys that premise. I hope the SEC continues to examine the use of order types at exchanges and prohibits those that are not in the public interest,” said Congresswoman Maxine Waters, Ranking Member of the Financial Services Committee.
Of course, now that even Maxine has joined in the fray, it's all over for Johnny 5, something which earlier news that HFT titan DRW was set to acquire one of its biggest competitors Chopper Trading, confirms all too vividly.
Oh well, at least the rigging was fun while it lasted.