Back in May we first introduced our readers to the FX manipulation practice known as “last look.” Wait, what’s that? This is what we said:
The last look practice is a legacy of over-the-phone currency trading, when traders would take a final check of the market before executing an order. It has survived even as foreign-exchange trading moved onto electronic platforms, leaving banks with the option to back out of an order after it was accepted by a client. Continue reading »
– “Project Omega” – Why HFTs Never Lose Money: The Criminal Fraud Explained (ZeroHedge, Aug 13, 2015):
Two weeks ago, without knowing the details of the most recent market-rigging and frontrunning scandal involving “alternative” market veteran ITG’s dark pool POSIT, which issued a vague 8-K it would settle with the SEC for “irregularities”, we explained what we thought had happened:
ITG had an in house prop trading group, or “pilot”, which operated for nearly two years, whose only signal was client order flow, which it would frontrun, and make millions in profits. In other words, once again precisely what we have claimed since 2009. But oh yes, not everyone is guilty of such manipulation. Only Liquidnet… and Pipeline… and ITG… and countless other ATS and HFT firms for whom clients are better known as either “easy money” or muppets.
And yes, we get the “trading experiment” narrative: calling it “criminal market manipulation and order frontrunning scheme” just does not sound like something the Modern Markets Initiative would spend millions of dollars to get Congressmen to agree on.
It turns out we were spot on, the only thing we missed was the name of this market manipulation exercise. Now, thanks to the SEC, we know: “Project Omega” (or as it was also correctly dubbed here the “criminal frontrunning scheme“) is how ITG dubbed its secretive prop-trading desk whose only purpose was to frontrun clients.
Here are the details for all you suckers who still read the HFT apologists and believe the bullshit that all these algos do is provide liquidity, when in reality all the really do is frontrun your orders, assuring them of 6 years of trading without a single day’s loss (or in the case of Virtu, one trading day loss). From the SEC: Continue reading »
– Why Sarao Is The Flash Crash Patsy: He Threatened To Expose The “Mass Manipulation Of High Frequency Nerds” (ZeroHedge, April 23, 2015):
There are several notable items in Bloomberg’s comprehensive overnight summary of the epic humiliation America’s market regulators are about to undergo, complete with yet another round of theatrical Congressional kangaroo courts, which will lead to a lot of red faces, a wrist slap or two and maybe even the termination of one or two lowly employees and… nothing else.
Because what difference does it make?
At this point only a bottom-up overhaul can “fix” the fragmented, broken market which by definition can only come after the next market crash, one which will promptly be blamed on HFTs (which leaving the central bankers unscathed).
Back to the Bloomberg piece in which we first discover that it wasn’t even the CFTC that, 5 years later, “figured out” the flash crash was one person’s fault: Continue reading »
Tags: High Frequency Trading
– Australia Regulator Furious As Central Bank Decision Leaked To HFTs For Third Time (ZeroHedge, April 6, 2015):
For the third month in a row, FX ‘traders’ in AUD “guessed” the Reserve Bank of Australia’s decision in the seconds before it was released to the public. Aussie regulators, seemingly furious at the blatant-ness of the front-running, confirmed they will be investigating the price spike overnight…
– SkyNet Is Almost Sentient: HFTs To Start Trading Bitcoin (ZeroHedge, April 6, 2015):
As noted earlier, with equities now a barren wasteland of volume (and liquidity), the last remaining HFT master (of whale order frontrunning) has been forced to go to those asset classes where organic flow is still abundant such as FX, courtesy of central banks engaged in global currency wars. However, HFTs realize it is only a matter of time before FX order flow also dries up as central banks take their trade away from public venues (and dark pools) and as such are always looking for new, untapped markets. One place where they are about to land according to the WSJ, with hilarious consequences sure to follow, will be the one place that HFTs should have felt at home from the very beginning: bitcoin.
– Michael Lewis is Right “Spoofing” Proves Market Rigged on Daily Basis (ZeroHedge, March 14, 2015):
Accordingly, Michael Lewis is right markets are rigged, but he really is underestimating the extent of market manipulation, financial markets really are the wild west, investors should always be wary of how they are being taken advantage of in financial markets. The phrase Caveat Emptor ‘Let the buyer beware’ applies here.
– Flash Boys’ Michael Lewis Warns “The Problem’s Not Just HFT, The Problem Is The Entire System” (ZeroHedge, March 13, 2015):
As HFT shops begin to turn on each other, it seems appropriate to reflect on the impact that Michael Lewis’ Flash Boys book had on exposing the ugly truth that many have been discussing for years in US (and international) equity (and non-equity) markets. As Lewis concludes, after explaining the attacks he has suffered from the HFT industry, “If I didn’t do more to distinguish ‘good’ H.F.T. from ‘bad’ H.F.T., it was because I saw, early on, that there was no practical way for me or anyone else… to do it. … The big banks and the exchanges [have] been paid to compromise investors’ interests while pretending to guard those interests. I was surprised more people weren’t angry with them.”
Over the past few weeks, a new piece of equipment has been spotted hanging off the NYSE primary microwave tower. Here it is…
– Meanwhile, Over At The “New York” Stock Exchange… Lasers (ZeroHedge, March 1, 2015):
The last time we looked at the most important tower in the world, about 4 months ago, it looked as follows:
– Spot The Birth Of High-Frequency Trading (ZeroHedge, Feb 28, 2015):
One of these things is not like the other… one of these things just doesn’t belong…
Since the ‘enabling’ of high-freqnecy trading on US equity exchanges, instead of ‘stability’ or ‘liquidity’, the only word this chart screams at us is… ‘noise’.
– “Holy Grail Of Trading” Crosses Into The Twilight Zone: HFT Firm Virtu Has Lost Money Once In 1,485 Trading Days (ZeroHedge, Feb 21, 2015):
One year ago, when HFT powerhouse Virtu launched its first attempt to go public and finally gave the world a glimpse into its trading perfection engine, we were stunned to learn that through the “miracles” of frontrunning, momentum ignition, quote stuffing, subpennying and all those other market manipulation techniques that have made HFT a staple – if extremely profitable – parasite of fragmented, broken “markets”, in its S-1 it wrote that “as a result of our real-time risk management strategy and technology, we had only one losing trading day during the period depicted, a total of 1,238 trading days.” We urged readers to “let that sink in: one trading loss day and 1237 days of profits.” To paraphrase: one losing day in five years of trading. We said that “that, ladies and gentlemen, is the Holy Grail of the New Normal broken, manipulated markets.“
A month later, Michael Lewis published Flash Boys and finally explained to the common person (if not corrupted, captured and purchased SEC regulators) what we have been pounding the table since 2009: that as a result of HFTs, markets are now two-tiered, unfair, broken, fragmented and manipulated in broad daylight, and since the HFT lobby controls the SEC, nothing will change. Continue reading »
With the stroke of a pen, President Obama has now set America on the path toward open rebellion and revolt. By declaring that he alone has the right to dictate immigration policy without the legislative approval of Congress, he has committed yet another lawless act in a long series of illegal schemes that cement his position in history as nothing more than a sociopathic liar and destroyer of nations.
President Barack Obama announced an executive order on immigration reform Thursday, which he will sign on Friday. The actions will affect up to 5 million undocumented immigrants in the US, many of whom are the parents or spouses of legal residents.
Obama announced his plan for unilateral action on immigration via a prime-time address from the White House. He will sign the executive order during a rally in Las Vegas on Friday. Because the plan will not be passed by Congress, it could also be easily reversed by a new president after Obama’s term runs out in just over two years.
BREAKING: New York City police commissioner says “accidental discharge” from police officer’s weapon may have killed man in Brooklyn.
— Reuters U.S. News (@ReutersUS) 21. November 2014
Rapid-DNA technology makes it easier than ever to grab and store your genetic profile. G-men, cops, and Homeland Security can’t wait to see it everywhere.
His latest intervention on behalf of the forces of opacity, revolves around the release of a report on CI.A. torture put together by The Senate Intelligence Committee, which is 6,000 pages long and has been five years in the making. Naturally, the Obama Administration is taking painstaking efforts to block its release.
A week ago, we penned “The Real Reason Why Germany Halted Its Gold Repatriation From The NY Fed“, in which we got, for the first time ever, an admission by an official source, namely the bank that knows everything that takes place in Germany – Deutsche Bank – what the real reason was for Germany’s gold repatriation halt after obtaining a meager 5 tons from the NY Fed:
… the gold community paid great attention to the decision of the German Bundesbank to “bring German gold home”. At the beginning of 2013, the Bundesbank announced it would repatriate 300 tonnes of gold stored in the US by 2020. It is well behind schedule, citing logistical difficulties. Yet diplomatic difficulties are more likely to be the chief cause of the delay, especially seeing as the Bundesbank has proven its capacity to organise large-scale gold transports. In the early 2000s, the Bundesbank incrementally repatriated 930 tonnes of German gold held by the Bank of England.
Some took offense with this, pointing out, accurately, that the gold held at the NY Fed in deposit form for foreign institutions had continued to decline into 2014 despite the alleged German halt. Well, today we know the answer: it wasn’t Germany who was secretly withdrawing gold from the NYFed contrary to what it had publicly disclosed.
It was the Netherlands.
In December 1912, no lessor man than J.P.Morgan testified to Congress to “justify Wall Street,” during investigations over alleged manipulation and collusion. The transcript reads like it could have been given yesterday (as nothing ever changes) but at its heart the banker laid out 33 “Morgan Epigrams” which appear – in the ensuing 102 years – have been lost to greed and arrogance… The irony is wondrous: “Securities do not always prove good”, “Money is gold, and nothing else”, “I think manipulation is always bad.”
Roundup is found in 75% of air and water samples. Many farmers drench crops with Roundup right before harvest. About 100 million pounds are applied to U.S. farms and lawns every year, according to the EPA.
Monsanto claims that Roundup is totally safe, and can be dumped on everything without problem.
Is it true?
A study from the Journal of Organic Systems includes the following 12 charts which show the correlation between Roundup (technically known as “glyphosate”) and disease:
The CIA wants to erase tens of thousands of internal emails sent by most covert and counterterror officers after they leave the agency, leading US senators and transparency advocates to fear the plan would mean the loss of vital government records.
It isn’t just our economy that is crumbling. Something is happening to America that no amount of money will be able to fix. Everywhere around us we can see evidence of the social decay that is systematically eating away at the foundations of our society.
The impossible is possible. Never say never. Wall Street bankers are staring agog at headlines coming from Europe where, in Iceland, the former chief executive of one of the largest banks in the country which was involved in crashing the economy in 2008 has been sentenced to jail time. As Valuewalk reports, in receiving a one year prison sentence, Sigurjon Arnason officially became the first bank executive to be convicted of manipulating the bank’s stock price and deceiving investors, creditors and the authorities between Sept. 29 and Oct. 3, 2008, as the bank’s fortunes unwound, crashing the economy with it. It appears he was as shocked by the verdict as Wall Street-ers are, “this sentence is a big surprise to me as I did nothing wrong.” It was likely all for the people’s own good…
Recent polls show pro-default parties growing popular in peripheral euro-area countries such as Greece, Italy and Spain. As Bloomberg Brief’s Maxime Sbaihi notes, in a depressed economic environment, their promises to restructure public debt might soon bring them to power and tempt traditional parties to adopt their ideas. This return of political risk in the euro area doesn’t appear to be priced in by market participants. As Italy’s Beppe Grillo recently exclaimed, “we will leave the Euro and bring down this system of bankers, of scum.”
A homemade sign proclaiming “AIDS, Ebola, Obama – Thanks Africa” caused a commotion in the town of Minden, Nebraska this week after a local man drew the ire of area residents when he erected it on his own property.
A “little” late:
For America’s 44 million senior citizens, plus tens of millions of others who are on the threshold of retirement, last month marked a watershed moment that is worth celebrating. At the end of October, the Federal Reserve announced the first step in returning to a more normal monetary policy. After nearly six years of near-zero interest rates and quantitative easing, the Fed is ending its bond-buying program and has signaled a plan to eventually begin raising the federal-funds rate, raising interest rates to more normal levels by 2017.
U.S. households lost billions in interest income during the Fed’s near-zero interest rate experiment.
The mayor of Jerusalem has called on Israeli authorities to revoke the citizenship of family members of terrorists. This proposal was made in response to growing tensions between Palestinians and Israelis.
A few days ago I posted an article saying that Iceland’s Bardarbunga volcano was pumping out 35,000 tons of sulphur dioxide per day, more than twice the amount spewed from all of Europe’s smokestacks.
Turns out that it’s even worse than that.
According to the Icelandic National Broadcasting Service, RUV, some 40,000 to 60,000 tons […]
– TV: US nuclear workers’ brains eaten away, hallucinating, mental capacity of preschooler — Wife films frightened, trembling husband on deathbed — It’s indescribable what they’ve done and they don’t care — They want you to die — Gov’t Experts: It’s allergies from cats or feathers… or B-12 deficiency — Doctor: Quit helping workers get help (VIDEO):
KING 5 News, Oct 14, 2014: Gary Sall… [worked at Hanford] for 28 years… 10 years ago… his brain function got worse and worse. Within 5 years he… could barely speak, hallucinated, and operated on the level of a 4-year-old… Doctors diagnosed him with work-related toxic encephalopathy, a degenerative brain disorder… [His wife] Barb documented the suffering in a difficult to watch video taken in 2011… in a hospital bed, trembling and frightened and on a feeding tube… The DOE’s insurer wrote that not Hanford, but alcohol consumption or a B-12 deficiency could be making him sick… He died 3 years ago at the age of 57.
– Twice as much Fukushima radiation near California coast than originally reported; Highest levels found anywhere in Eastern Pacific — Scientist: Very little we can do… It’s unprecedented… God forbid anything else happens — Gundersen: Multiple plumes now along west coast… Will be coming “for century or more” (AUDIO)
Halts shipments of corn, soybeans, wheat, fertilizer, salt and other goods from the most northern reaches of the nation’s busiest waterway.
Another three feet (1 meter) of snow forecast for Buffalo.
More collapses expected. Homeowners and store employees scrambling to remove the snow before rainfall adds even more weight to overloaded roofs.
A bitter war of words between hacker collective Anonymous and the Klu Klux Klan risks spilling over into real violence, with the right-wing hate group allegedly threatening to shoot dead activists wearing the Guy Fawkes mask in southern Missouri.
Around 30 percent of the world’s population is now obese, while 50 percent is expected to fall into the category by 2030. Meanwhile, 5 percent of global deaths each year are linked to the condition, creating a drag on the global economy.
Despite the knee-trembling awesomeness of a double-whammy promise of liquidity, US equity markets ended the week on a decidedly down note. The realization that Draghi’s all talk (no impact on US stocks) and PBOC’s move is not a liquidity surge and has limited impact on the economy left stocks tumbling once the opening OPEX levels had printed. The USD rose notably on the day after EUR plunged under 1.24 on Draghi (USD +0.9% on the week). Despite USD strength, gold rose 1% (as did Silver) on the week, rising for the 3rd week in a row for the first time in 4 months (and the 3rd Friday surge in a row). Oil rose 1% on the week, breaking an 8-week losing streak but Copper prices fell around 0.3% on the week, having given back the kneejerk gains post-PBOC today. Treasury yields dropped after kneejerking higher on PBOC. 30Y at 3.01% had its 2nd lowest weekly close since May 2013. VIX melted down into the close to 13.01. Late-day buying panic lifts stocks off their lows leaving Dow & S&P at all-time recordest highs of all-time ever in history (as small caps closed red).
I stumbled across two mind blowing charts yesterday that had me pondering how generations of Americans had frittered their lives away, spending money they didn’t have on things they didn’t need, utilizing easy to acquire debt, and saving virtually nothing for their futures or a rainy day. We are a nation of Peter Pans who never grew up. While I was driving home from work, one of my favorite Pink Floyd tunes came on the radio and the lyrics to Time seemed to fit perfectly with the charts I had just discovered.
– HFT War Stories: The Algo that Couldn’t Count:
This is the first in MKTSTK’sHFT War Stories series. Submitted anonymously by a high frequency trader. Names of people, places, and products have been omitted:
Algo trading has a way of making your hair turn white. Sometimes it’s the wild market action. The response then is to cut risk and keep on trading. The big losses come from avoidable human errors. Those are the losses you might not come back from.
The trading world is increasingly automated. Every year there are fewer human eyes watching the market at any given time. Traders employ algorithms to cut latency and market impact. Dealers find automation indispensable in quoting thousands of different exchange traded derivatives.
After a frosty reception at the G20 summit in Australia this week, Russian President Vladimir Putin required some much needed rest, at least according to the official explanation given for his conspicuously early departure from the proceedings. All things considered it could have been a lot worse. Russia finds itself in familiar territory after a controversial half-year, highlighted by the bloody and still unresolved situation in Ukraine. Nonetheless, the prospect of further sanctions looms low and Russia’s stores of oil and gas remain high.
While some might scoff at the idea of there even being a bubble in hi-tech start-ups, it appears the massive wall of money that has been thrown at dot-com 2.0 names – all money-losing, social, mobile, cloud name-droppers – has dried up. As The TechCrunch Bubble Index shows, the last 90 days have seen startup-funding announcements collapse over 40% to their lowest level in almost 3 years…
First Mario Draghi made some strong statements speaking in Asia that “It is essential to bring back inflation to target and without delay,” which sent EURUSD tumbling BUT did not spark moves in the S&P 500 (though Gold slipped). It was not until the PBOC cut rates (and sent AUD surging) that the US equity market perked up and started ripping… along with gold and as the morning progressed, gold has kept going as it is clear the Central Banks of the world have only one policy left… (no wonder the Dutch want their gold back)
Tags: autism, Banking, Barack Obama, California, Cancer, CIA, Climate Change, Crime, DNA, Economy, Environment, FBI, Food, Fukushima, Global News, Global Warming, Glyphosate, Gold, Government, Health, High Frequency Trading, Iceland, Japan, JPMorgan, Meteorology, Monsanto, Nuclear, Nuclear reactors, Obama administration, Oceans, Politics, Radiation, Roundup, Roundup Ready, Russia, Science, Snow, Society, Stock Market, Surveillance, Technology, Torture, U.S., Volcano, Wall Street, Winter
– How Barclays Got Caught Red-Handed With “Pernicious HFT Fraud” (ZeroHedge, June 25, 2014):
First it was gold, now it is HFT – poor Barclays just can’t get away with any market rigging crime these days.
Remember when in the aftermath of the most recent Michael Lewis-inspired HFT scandal, one after another HFT and Dark Pool exchange swore up and down they know, see, hear and certainly trade no predatory algo evil? Turns out they lied, as usual. Continue reading »
– HFT Purge Begins: SEC Prepares To “Remove” Some High Frequency Trading Firms (ZeroHedge, April 13, 2014):
Ever since Goldman’s anti-HFT Op-Ed less than a month ago, and since the even more recent full-hearted support by Goldman of Michael Lewis’ most recent entry into the anti-HFT crusade (one promoting the Goldman-supported IEX exchange), one thing has been clear: the days of market structure in its current format are numbered. This was further confirmed after Goldman exited both its legacy Spear Leeds & Kellogg designated market making post at the NYSE, and is said to be winding down its market-dominating dark pool, Sigma X.
It also means that our 5 year crusade against HFT – not because we want it replaced with a different, Goldman-backed exchange but because HFTs inherently destabilize the market (see May 2010 and the now daily flash crash in individual stocks and/or exchanges) – and specifically those most profitable but also most parasitic and predatory HFT strategies… Continue reading »
From the article:
Perhaps, like Goldman, Fidelity knows that “unless things change, there’s going to be a massive crash – a flash crash times ten…”
– The HFT Blowback Continues: Fidelity Creates New Trading Venue (ZeroHedge, April 10, 2014):
In what the firm believes will be an improvement over other so-called dark pools because it will be a collaboration among big mutual-fund firms, WSJ reports that the giant fund manager is quietly building a new trading venue designed to let big money managers sidestep many of the problems that they argue lead to unfair or costly trading – i.e. avoid the HFT predation. Fidelity, with $1.95 trillion of assets under management, is in the initial stages of planning the trading venue and has just begun to pitch the idea to other large asset managers. It seems 5 years of vociferous exposure and a Michael Lewis book may be beginning to starve the HFTs of their prey.
– The Father Of High Speed Trading Speaks: “The Market We Created Is A Casino; A Complete Mess; A Rigged Game” (Zerohedge, April 7, 2014):
While simplistic economist hacks and conflicted industry practitioners who stand to lose their entire revenue stream should HFT be liquidated, not to mention pagreview trolling journos, are suddenly not only experts in HFT, but are convinced allegations that high frequency trading rigs markets are blown out of proportion, here is what one of the actual pioneers of, and erstwhile legends in, computerized trading – the billionaire founder of Timber Hill and Interactive Brokers Thomas Peterffy – the man NPR dubbed the “father of high-speed trading” has to say.
The following excerpt is courtesy of Scott Patterson’s book Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market, which largely covers the same subject matter as Michael Lewis (and well before), and which has been profiled here previously. Continue reading »
– High Frequency Trading: All You Need To Know (ZeroHedge, April 6, 2014):
In the aftermath of Michael Lewis’ book “Flash Boys” there has been a renewed surge in interest in High Frequency Trading. Alas, much of it is conflicted, biased, overly technical or simply wrong. And since we can’t assume that all those interested have been followed our 5 year of coverage of a topic that finally has earned its day in the public spotlight, below is a simple summary for everyone.
– First Nasdaq Stock Flash-Crashes, Now The Nasdaq Index Is Crashing (Zerohedge, April 4, 2014):
UPDATE: Nasdaq negative year-to-date; Biotechs 3-month lows. AMZN, FB, TWTR, NFLX, P all in Bear market territory
Shortly after 946amET, the stock of The Nasdaq OMX Group suddenly dropped in a mini-flash-crash from from 35.98 to 35.00 in just over 2 seconds on approximately 100,000 shares. As Nanex notes, this is what high-frequency-trading liquidity looks like. But now, an hour or so later, the Nasdaq index and most especialy its Biotech and high-growth names are being crushed. Biotechs are near 3-month lows, Momos are down 16 to 18% since FOMC, and Nasdaq is about to go negative for the year.
– BATS Admits CEO Lied About HFT On CNBC (ZeroHedge, April 4, 2014):
It is now quite clear why BATS CEO Bill O’Brien was so agitated during the Tuesday’s screamfest on CNBC. As The Wall Street Journal’s Scott Patterson reports, under pressure from the NYAG, BATS has hurriedly issued a statement correcting the CEO’s false comments during the exchange with IEX’s Brad Katsuyama. After Katsuyama said “you wanna do this, let’s do this” clearly giving him an out, O’Brien stated that BATS priced its trades off ‘high-speed’ data feeds when in fact they price their trades off a much slower feed (and therefore ‘enable’ the exact HFT-front-running that is in question).
Here is the clip in particular where O’Brien lies following Katsuyama’s question… that BATS uses the high-speed feed to price its trades…
The exchange in question…
“What do you use to price trades in your matching engine on Direct Edge?” Mr. Katsuyama asked Mr. O’Brien.
“We use the direct feeds,” Mr. O’Brien said.
Mr. Katsuyama, whose IEX dark pool markets itself as a haven for investors against high-speed traders, later brought up the issue again. “You use the SIP to price trades on Direct Edge,” he said.
“That is not true,” Mr. O’Brien said.
But as The Wall Street Journal reports, it was true
– The Evolution Of Wall Street (In One Cartoon) (ZeroHedge, April 3, 2014):
Wall Street has come a long way from Jesse Livermore’s “money is made by sitting, not trading”, “It takes time to make money”, and “nobody can catch all the fluctuations.” Now we have HFT “flash boys” who only make money ‘trading’, in milliseconds of time, capturing every fluctuation…
h/t @kalleldn of Penguin Press
– Watch As HFT Debate Devolves Into Epic Screamfest In Milliseconds (ZeroHedge, April 1, 2014):
The clearly agitated BATS CEO came out swinging, blasting Katsuyama and Lewis “Shame On You,” for apparently telling the truth of what occurs in the stock ‘market and letting everyone in on it’. The tension grows when he presses Katsuyama on whether he really believes it is rigged… who then erupts “I believe the markets are rigged.. and that you are a part of the rigging.” Then the gloves come off “you wanna do this, let’s do this!” and then it got worse (or better)…
Just the first 3 minute round in this epic clip is worth the price of admission (and note the floor traders cheers in the background)… but to watch the status quo crushed under the awesome honesty of reality as this is all exposed, watch on…
And here’s the highlights…
@Amazon.com: Flash Boys: A Wall Street Revolt Price: $17.46
From the article:
The stock market really was rigged… “It’s 2009,” Katsuyama says. “This had been happening to me for almost two years. There’s no way I’m the first guy to have figured this out. So what happened to everyone else?” The question seemed to answer itself: Anyone who understood the problem was making money off it…
– Read Michael Lewis’ Flash Boys: A Wall Street Revolt: An Adaptation (ZeroHedge, March 31, 2014):
This article is adapted from the book “Flash Boys: A Wall Street Revolt,” by Michael Lewis, published by W. W. Norton & Company. Courtesy of The New York Times Magazine. The full Michael Lewis book can be purchased on Amazon.
The Wolf Hunters of Wall Street
Before the collapse of the U.S. financial system in 2008, Brad Katsuyama could tell himself that he bore no responsibility for that system. He worked for the Royal Bank of Canada, for a start. RBC might have been the fifth-biggest bank in North America, by some measures, but it was on nobody’s mental map of Wall Street. It was stable and relatively virtuous and soon to be known for having resisted the temptation to make bad subprime loans to Americans or peddle them to ignorant investors. But its management didn’t understand just what an afterthought the bank was — on the rare occasions American financiers thought about it at all. Katsuyama’s bosses sent him to New York from Toronto in 2002, when he was 23, as part of a “big push” for the bank to become a player on Wall Street. The sad truth was that hardly anyone noticed it. “The people in Canada are always saying, ‘We’re paying too much for people in the United States,’ ” Katsuyama says. “What they don’t realize is that the reason you have to pay them too much is that no one wants to work for RBC. RBC is a nobody.”
Prepare for collapse.
– High Frequency Trading: Why Now And What Happens Next (ZeroHedge, March 31, 2014):
For all the talk about how High Frequency Trading has rigged markets, most seem to be ignoring the two most obvious questions: why now and what happens next?
H/t reader M.G.:
“The Stock Market is Rigged in favor of High Frequency trades” says an article on Reuters. No kidding.
The article says better than half of all transactions are now HFT…..actually, it is 85%. I call it skim and sell.
– U.S. stock markets are rigged, says author Michael Lewis (Reuters, March 31, 2014)
– “The Market Is Rigged” – Michael Lewis Explains How HFTs “Screw” Investors Every Day (ZeroHedge, March 31, 2014):
It was almost excatly five years ago to the day, on April 10, 2009, that Zero Hedge – widely mocked at the time by “experts” – began its crusade against HFT and the perils of algorithmic trading (which of course were validated a year later with the Flash Crash). In the interim period we wrote hundreds if not thousands of articles discussing and explaining the pernicious, parasitic and destabilizing role HFT plays in modern market topology, and how with every passing day, markets are becoming increasingly more brittle, illiquid and, in one word, broken. Or, as Michael Lewis put it most succinctly, “rigged.” With Lewis’ appearance last night on 60 Minutes to promote his book Flash Boys, and to finally expose the HFT scourge for all to see, we consider our crusade against HFT finished. At this point it is up to the general population to decide if this season’s participants on Dancing with the Stars or the fate of Honet Boo Boo is more important than having fair and unrigged markets (obviously, we know the answer).
For those who missed it, here is the full video again.
And broken down by segment: in the clip below, Lewis explains how an extra millisecond allows high-frequency traders to exploit computerized trading in the U.S. stock market. By “beating” investors to exchanges, Lewis argues that high-frequency traders can buy stocks and quickly sell them back at higher prices. Continue reading »
– The Holy Grail Of Trading Has Been Found: HFT Firm Reveals 1 Losing Trading Day In 1238 Days Of Trading (ZeroHedge, March 11, 2014):
Think JPM’s zero trading day losses in 2013 was impressive? Prepare to have your mind blown. The chart below shows the chart of daily net trading income by High Frequency Trading titan Virtu, taken from its just filed IPO prospectus. The punchline: in 4 years of trading Virtu has had one, one, day in which it lost money.
From the S-1: “The chart below illustrates our daily Adjusted Net Trading Income from January 1, 2009 through December 31, 2013. As a result of our real-time risk management strategy and technology, we had only one losing trading day during the period depicted, a total of 1,238 trading days. “
Let that sink in: one trading loss day and 1237 days of profits. And that, ladies and gentlemen, is the Holy Grail of the New Normal broken, manipulated markets.
– First Ever High Frequency Trading Transaction Tax Introduced In Italy (ZeroHedge, Sep 2, 2013):
Nearly four years after Zero Hedge first suggested an HFT tax should punish algos that “churned” quotes and blasted empty bids and offers to stimulate “momentum ignition” strategies, and generally corrupt market structure in a way that lead to both the flash crash, the BATS IPO farce, the FaceBook IPO debacle and the Nasdaq 3 hour crash, the first such tax is now a reality. And while it is not, and likely never will be implemented in a major (if declining) exchange such as the NYSE or Nasdaq, the first country to finally put an end to millions of parasitic empty quotes is Italy.
From the FT:
Italy will on Monday become the first country to introduce a tax on high-frequency trading in a move that has become a test case for potential further crackdowns on the controversial practice.
– Summarizing The Known Rigged Markets (ZeroHedge, June 12, 2013):
Following last night’s revelation that FX trading is the latest addition to the “rigged” column, here is a summary of the known market manipulation scandals (because it can be problematic keeping track of all by now):
- Libor – interest rates (link)
- ISDAfix – swaps (link)
- Platts – oil prices (link)
- WM/Reuters – FX (link)
- High-Frequency Trading – equities (link)
We also know that the Fed and world central banks are engaged in a full blown (and unprecedented) Treasury curve modeling exercise courtesy of both ZIRP (short-end) and QE (long-end), and that courtesy of some $12 trillion in extra liquidity in the past 5 years, stocks are at an artificial “weath effect” sugar high. Continue reading »
“This morning, in 15 milliseconds, 28 million dollars changed hands in the stock market before data was made available to other investors. That space of time is less than the blinking of one’s eye. The report was on CNBC, I am following the markets due to what is happening in Japan. This is a new level of high frequency trading that ought to be outlawed, no wonder the individual investor has no chance…………”)
– Unraveling Monday’s Early Data Release to Traders (CNBC, June 5, 2013):
Monday’s market-moving ISM manufacturing data was inadvertently sent early by Thomson Reuters to a select group of high-frequency traders, many of whom immediately traded on the information before it was available to the wider market, CNBC has learned.
The ISM manufacturing data, which on Monday came in disappointingly low and sent traders scrambling to sell shares, was set to be released at precisely 10 a.m. by the Institute for Supply Management, a private entity that puts out the data each month.
But analysts at Nanex LLC, a Chicago-area analysis firm spotted a sharp downward market reaction just before 10 a.m., setting up a mystery: How did some traders appear to know the data would disappoint the market before the scheduled release time?