Is forex market controlled by someone? - page 41
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Something peculiar is going on in the final 30 minutes of trading, and it's not good
After some ups and downs, the S&P 500 is up by 1% since the beginning of the year.
But something peculiar has been going on just before the US markets close at 4 p.m. ET each day.
"We looked at the final 30 minutes of trading year to date and found the market has lost -2% over that time frame," FBN Securities' JC O'Hara said in a note to clients. "Large institutions use the closing liquidity to help facilitate their trades, and with the bias being to sell we mark this as a red flag."
Who knows what's going on? We're not going to try to speculate.
"While we are still bullish as overall trends are favorable, we find it troubling to see money outflows continue from SPY but more importantly see continued end-of-day selling in stocks."
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There are many factors that control the forex market but we cannot say that a particular person or banks solely controls it.
There are many factors that control the forex market but we cannot say that a particular person or banks solely controls it.
Did you read the posts of this thread?
Believing that the biggest money market in the world is not manipulated by major players, is the same as telling that all people are heart and soul. Where there is money, there will be thieves
Banks' forex lawsuit settlements near $2 bln-WSJ
The total amount paid by banks to settle a civil lawsuit related to allegations that traders manipulated the currency market has reached almost $2 billion following a recent round of settlement agreements, the Wall Street Journal reported.
HSBC Holdings Plc, Barclays Plc, BNP Paribas SA and Goldman Sachs Group Inc have recently signed agreements to settle the case, the Journal reported, citing people familiar with the matter. (on.wsj.com/1GYC888)
HSBC has agreed to pay $285 million and Barclays $375 million, the Journal reported.
Bank of America Corp settled its portion of currency rigging lawsuit in April.
JPMorgan Chase & Co settled for $99.5 million in January and Switzerland's UBS Group AG settled for $135 million in March.
Other defendants include Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, Morgan Stanley and Royal Bank of Scotland Group Plc.
Investors including the city of Philadelphia, hedge funds and public pension funds accused the 12 banks of having conspired since January 2003 in chat rooms, instant messages and emails to manipulate the WM/Reuters Closing Spot Rates.
According to the lawsuit, the banks held an 84 percent global market share in currency trading, and were counterparties in 98 percent of U.S. spot volume.
HSBC and Goldman Sachs declined to comment. Barclays and BNP Paribas could not be immediately reached for comment.
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Its his opinion what's the issue
I agree that we all have a right to have opinions.
But I am sick of arguments like : "forex market is too big to be controlled". So is the 1% too small a percentage to control more than 50% of world wealth - and they do
Forex is rigged, add the sooner we accept it, the sooner we can adjust our trading systems. Pretending not to see it leads to loses - and that is why "forex can not be rigged" statements are dangerous
Does not mater - in the end men will give up to HFT
To beat this rigged stock market, stop what you’re doing
Last year the Securities and Exchange Commission charged a New York-based firm in the first-ever case of high-frequency trading fraud.
Athena Capital Research made massive trades quickly to “manipulate” closing prices in targeted stocks, the SEC alleged.
“Athena … used complex computer programs to carry out a familiar, manipulative scheme: marking the closing price of publicly traded securities,” the SEC said in official documents. “Through a sophisticated algorithm, Athena manipulated the closing prices of thousands of Nasdaq-listed stocks over a six-month period.”
Athena settled the SEC allegations in October 2014 for $1 million. But how exactly did the firm executes those trades, and how much did it make? That’s where things get complicated.
Athena capitalized on what are known as “imbalance only,” or IO, orders that are meant to help the market function in the minutes immediately around the opening or closing bell of a trading day. Simply put, an IO order is a special kind of limit order where sell orders are executed at or above a fixed price, and buy offers are executed at or below. This way, traders don’t get stuck with a grossly unfair price because they are the last guy on the floor and don’t have a counter-party.
Someone at Athena figured out he could wait until the initial imbalance was identified by Nasdaq market makers in a given stock at 3:50 p.m. New York time, and then use a super-fast trading robot to play both sides of the trade in those final minutes. In that way, Athena could get “guaranteed” pricing power because of the nature of the imbalance only orders around the closing bell.
The SEC details Athena’s trading activity in online auctioneer eBay EBAY, +0.21% on Nov. 25, 2009, as an example. Consider the race to the close that is illustrated by Athena’s final order on the day, placed at precisely 3:59:59.950 p.m.
So how much money did Athena make that day? Evidently only several thousand dollars — the SEC claims Athena unloaded 233,979 shares of eBay for $23.61 each, about 3 cents better than the previous price just fractions of a second beforehand.
But for a small investment firm with about $40 million in total assets at the time, making six or seven grand in a single transaction can add up in a hurry.
As the Athena case shows, manipulating the markets with high-frequency trading is extremely complicated. Perpetrators are hard to track, and it’s even harder to determine how these rapid-fire-tactics are breaking laws and regulations. Sadly, there hasn’t been much other enforcement news on the HFT front since — and considering this 2014 settlement was in regard to shenanigans in 2009, that’s even more disturbing.
So much for a new era of enforcement and safer markets.
Level the playing field
“The challenge in pursuing charges against these firms is that they are taking advantage of changes in the technology underpinning the markets to profit from quick trades, which is not illegal,” law professor Peter J. Henning wrote in the New York Times soon after the Athena settlement was reached. “But regulators can find it difficult to draw the line between acceptable trading strategies and manipulation because of the complexity of the strategies.”
Henning points out that the biggest challenge for the SEC is “showing that the person acted with the intent to artificially affect prices, not just that the trading sought to generate a profit.”
In fact, he warns that “the message for high-frequency traders is to tread carefully in designing algorithms to avoid the appearance that the sole goal is to affect stock prices.”
Great. Admit that you were greedy but not manipulative, and get a slap on the wrist. Look, I support investing and capital markets. For decades, the stock market has been one of the most powerful wealth-creation tools available to families of even modest means. But there’s something to be said for a level playing field.
Various reports estimate that roughly half of all trading volume in U.S. equity markets are done by high-frequency trading algorithms like those that Athena used. And while competition among the robots has heated up and HFT influence appears to have plateaued, there are still some 900 million shares traded via algorithm every day.
HFT is indeed a global concern. Just look at a $617 billion electronic trading snafu in Japan last year for proof that U.S. markets are not alone — including orders for 57% of outstanding shares in Toyota TM, -0.87% The trades were canceled and unwound, but when robo-traders can take a majority stake in one of the world’s biggest automakers overnight, it’s a pretty big deal.
And the destabilizing force of HFT will only grow as the technology evolves, moving more shares and more market value in even shorter time frames.
Europe is in this mess, too. According to 2012 data, HFT algorithms represented about 39% of the total European stock market, which adds up to trillions of dollars in trading activity each year. And while EU member states have tried to keep up, a recent proposal to implement a mandatory half-second freeze on any market orders was killed in the latest round of regulatory reforms.
Yet left unattended, the problem will only worsen. Regulators around the world — including representatives from the U.S., the U.K., France, Germany and Japan — collectively have warned that HFT transactions increase “systemic risk” and may result in “sizable impact on the financial markets through direct errors or the reactions of other algorithms to the error.”
Sure, individual investors can play the market with greater ease than ever. But easy trading and ready liquidity have a darker side. The Congressional Research Service says HFT provides the market with “phantom liquidity” — and the theoretical volume created by HFT algorithms “may be fleeting and transient due to the posting of and then the almost immediate cancellation of trading orders.”
That leaves the average investor outgunned — paying unfair prices at times, and facing the risk of a systemic breakdown sparked by an overzealous HFT robot that crashes the market.
And no matter if the trading is high-tech or low-tech, retail investors are at a tremendous disadvantage. Not only do they lack the reflexes and infrastructure to get to trades first, they also wind up paying a pretty penny, either because of unfavorable pricing or high fees. Author Michael Lewis outlined at length those dangers in his book about HFT, “Flash Boys.”
“What it does is it neatly divides the market into predator and prey,” Lewis told NPR last year. “It creates this relationship between people who are there to actually invest in companies and these artificial middlemen who have been unnecessarily inserted in between buyers and sellers of stock.”
Moreover, getting scalped for a few pennies here and there in the blink of an eye is hard to detect. Whether it’s a human or a robot doing the manipulation, they both make money by trading quickly in small increments — and then doing that thousands of times over so it adds up.
Markups and robotic trading algorithms are also hard to understand for the typical American voter who doesn’t even own stocks (only 14% of Americans do), or the typical lawmaker who is confused by the complexity of the issue.
The result is a power vacuum that unscrupulous Wall Streeters and super-fast HFT firms are only too happy to exploit.
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UBS Gave Out ‘Instruction Manual on Fixing Libor,’ Hayes Said
Thomas Hayes, a former trader on trial over charges he manipulated benchmark rates, told prosecutors in 2013 that UBS Group AG distributed “an instruction manual on fixing Libor” to suit their trading positions.
The Swiss bank’s e-mailed “Guide to Publishing Libor Rates,” which was shown to jurors by prosecutors in London Thursday, included an instruction for traders to adjust their submissions depending on their “delta/fixing position.”
“If 3m Libor” exposure “is 4,125 this means we are receiving” and “therefore we want to increase the fixing by 25 basis points,” according to the internal UBS guide. “If the number is negative then vice-versa.”
Hayes, the first person to stand trial for allegedly manipulating the London interbank offered rate, told prosecutors the document was evidence that Libor-rigging was standard operating procedure during his time at UBS.
The problem was exacerbated because the managers who oversaw Libor submissions also had large trading positions based on the benchmark, Hayes added.
“This is where what UBS is doing in terms of throwing individuals under the bus is really wrong,” Hayes told the Serious Fraud Office in 2013.
Hayes worked at UBS from 2006 to the end of 2009 before moving to Citigroup Inc. The 35-year-old is accused of eight counts of conspiracy to manipulate Libor, a benchmark for financial products worldwide.
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Can we get that manual?
:):)