HFT Stock Manipulation In Action - page 3
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It is getting worse and worse : now they are not able to find out a plausible answer to the fact that everybody in that chain knows that all is a fraud.
Hi nbtrading,
But you know this yourself because you are a trader. Think about all those who do not have any idea of how the markets are operated, think about IRS, think about all those funds, hedge funds all late behind the "insiders". Think that ECB is going to give a statement in the next hour, think that NFP is for tomorrow. Happy trading.
Tomcat98
"HFT Is A Growing Cancer" Says Mom And Pop's Favorite Retail Broker Charles Schwab
On one hand CNBC does its darnedest to refute Michael Lewis' claim that markets are rigged (even if it woefully does so by showcasing the most clueless "defenders" it can afford), and yet on the other "mom and pop's" preferred retail broker Charles Schwab, just came out and slammed HFT as a "growing cancer that needs to be addressed." Hmmm.... who to believe?
From Charles Schwab:
High-frequency trading is a growing cancer that needs to be addressed
April 3, 2014
Schwab serves millions of investors and has been observing the development of high-frequency trading practices over the last few years with great concern. As we noted in an opinion piece in the Wall Street Journal last summer, high-frequency trading has run amok and is corrupting our capital market system by creating an unleveled playing field for individual investors and driving the wrong incentives for our commodity and equities exchanges. The primary principle behind our markets has always been that no one should carry an unfair advantage. That simple but fundamental principle is being broken.
High-frequency traders are gaming the system, reaping billions in the process and undermining investor confidence in the fairness of the markets. It’s a growing cancer and needs to be addressed. If confidence erodes further, the fuel of our free-enterprise system, capital formation, is at risk. We can’t allow that to happen. For sure, we still believe investing in equities is a primary path to long-term wealth creation, and we believe in the long-term structural integrity of the markets to deliver that over time for individual investors, which is all the more reason to be vigilant in removing anything that creates unfair advantage or undermines investor confidence.
On March 18, New York Attorney General Eric Schneiderman announced his intention to “continue to shine a light on unseemly practices in the markets,” referring to the practices of high-frequency trading and the support they receive from other parties including the commodities and equities exchanges. He has been a consistent watchdog on this matter. We applaud his effort and encourage the SEC to raise the urgency on the issue and do all they can to stop this infection in our capital markets. Investors are being harmed, and they shouldn’t have to wait any longer.
As Michael Lewis shows in his new book Flash Boys, the high-frequency trading cancer is deep. It has become systematic and institutionalized, with the exchanges supporting it through practices such as preferential data feeds and developing multiple order types designed to benefit high-frequency traders. These traders have become the exchanges favored clients; today they generate the majority of transactions, which create market data revenue and other fees. Data last year from the Financial Information Forum showed this is no minor blip. High-frequency trading pumped out over 300,000 trade inquiries each second last year, up from just 50,000 only seven years early. Yet actual trade volume on the exchanges has remained relatively flat over that period. It’s an explosion of head-fake ephemeral orders – not to lock in real trades, but to skim pennies off the public markets by the billions. Trade orders from individual investors are now pawns in a bigger chess game.
The United States capital markets have been the envy of the world in creating a vibrant, stable and fair system supported by broad public participation for decades. Technology has been a central part of that positive story, especially in the last 30 years, with considerable benefit to the individual investor. But today, manipulative high-frequency trading takes advantage of these technological advances with a growing number of complex institutional order types, enabling practitioners to gain millisecond time advantages and cut ahead in line in front of traditional orders and with access to market data not available to other market participants.
High-frequency trading isn’t providing more efficient, liquid markets; it is a technological arms race designed to pick the pockets of legitimate market participants. That flies in the face of our markets’ founding principles. Historically, regulation has sought to protect investors by giving their orders priority over professional orders. In racing to accommodate and attract high-frequency trading business to their markets, the exchanges have turned this principle on its head. Through special order types, enhanced data feeds and co-location, professionals are given special access and entitlements to jump ahead of investor orders. Last year, more than 95 percent of high-frequency trader orders were cancelled, suggesting something else besides trading is at the heart of the strategy. Some high-frequency traders have claimed to be profitable on over 99 percent of their trading days. Our understanding of statistics tells us this isn’t possible without some built in advantage. Instead of leveling the playing field, the exchanges have tilted it against investors.
Here are examples of the practices that should concern us all:
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BATS Admits CEO Lied About HFT On CNBC
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...
But as The Wall Street Journal reports, it was true
Full BATS Statement below:
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It was obvious from the video too that he is lying.
Come on : whoever tells that the market is not rigged is either from Mars or is lying. Just watch the frontruning that is going on on forex. When they can do that with forex, stocks and commodities are a kids game to rig
They can not do that in forex without a collaboration of some brokers. If it us the case, then it is obvious why metaquites was making this ridiculous update
Everybody wants money, but this time it becomes too much
U.S. probing high frequency trading
The Justice Department is investigating whether high frequency trading violates insider trading laws, Attorney General Eric Holder said Friday.
"This practice, which consists of financial brokers and trading firms using advanced computer algorithms and ultra-high speed data networks to execute trades, has rightly received scrutiny from regulators," Holder said at a House hearing. "The department is committed to ensuring the integrity of our financial markets - and we are determined to follow this investigation wherever the facts and the law may lead."
It is the first public confirmation of the investigation.
High frequency trading has been in the news a lot this week. Author Michael Lewis charged in his new book "Flash Boys" that firms engaged in high frequency trading are gaming the system and unfairly making profits at the expense of everyone else who invests in the U.S. stock market
"The United States stock market, the most iconic market in global capitalism, is rigged ... by a combination of the stock exchanges, the big Wall Street banks and high-frequency traders," he said in an interview with CBS' "60 Minutes."
Lewis' criticisms have been echoed by some others, including Charles Schwab, the founder of the discount trading firm, who called high frequency trading a "growing cancer" that needs to be outlawed.
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DoJ will only push it under the rug
I is not true that nobody knew and now, all of a sudden, all know. They all knew, but they were nor getting "points"
from blowing the whistle on it (or they were getting money for not blowing the whistle). All this is a show that will not change anything
Dark markets may be more harmful than high-frequency trading
Fears that high-speed traders have been rigging the U.S. stock market went mainstream last week thanks to allegations in a book by financial author Michael Lewis, but there may be a more serious threat to investors: the increasing amount of trading that happens outside of exchanges.
Some former regulators and academics say so much trading is now happening away from exchanges that publicly quoted prices for stocks on exchanges may no longer properly reflect where the market is. And this problem could cost investors far more money than any shenanigans related to high frequency trading.
When the average investor, or even a big portfolio manager, tries to buy or sell shares now, the trade is often matched up with another order by a dealer in a so-called "dark pool," or another alternative to exchanges.
Those whose trade never makes it to an exchange can benefit as the broker avoids paying an exchange trading fee, taking cost out of the process. Investors with large orders can also more easily disguise what they are doing, reducing the danger that others will hear what they are doing and take advantage of them.
But the rise of "off-exchange trading" is terrible for the broader market because it reduces price transparency a lot, critics of the system say. The problem is these venues price their transactions off of the published prices on the exchanges - and if those prices lack integrity then "dark pool" pricing will itself be skewed.
Around 40 percent of all U.S. stock trades, including almost all orders from "mom and pop" investors, now happen "off exchange," up from around 16 percent six years ago.
This trend is "a real concern," John Ramsay, former head of the U.S. Securities and Exchange Commission's (SEC) Trading and Markets division, said on the sidelines of a conference in February. "We have academic data now that suggests that, yes, in fact there is a point beyond which the level of dark trading for particular securities can really erode market quality."
Given the $21.4 trillion worth of U.S. stocks that were traded in 2012, even a small mispricing can move the needle by tens of billions of dollars.
Lewis' new book - "Flash Boys: A Wall Street Revolt" - says that high speed traders bilk that kind of money from investors every year. He focuses on how high-frequency trading firms use ultra- fast telecom links, microwave towers and special access to exchanges to gain an edge over other traders.
The U.S. Justice Department is investigating high-speed trading for possible insider trading, Attorney General Eric Holder told lawmakers on Friday. Other regulators and the FBI have also confirmed they are looking into potential wrongdoing by high-frequency stock traders.
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Triple Whammy Shocker: Goldman Shutting Down Sigma X?
Back on March 21, before the release of Michael Lewis' Flash Boys and before the infamous 60 Minutes interview, when Goldman COO Gary Cohn wrote his infamous WSJ Op-ed bashing HFT, it was clear that something was afoot. That something became promptly clear when it was revealed that Goldman is among the core backers of the pseudo dark-pool IEX exchange popularized as the protagonist in Flash Boys, and juxtaposed to the frontrunning, and faceless, HFT antagonist that Lewis maanged to demonize so well in the span of a few hundred pages, he promptly provoked a renewed investigation by the FBI, the SEC and DOJ into HFT.
A few days later, the shocker became a double whammy when Goldman announced that in addition to turning its back on HFT which had served it so well for years, the firm would also say goodbye to the NYSE and its designated market maker post, the last remaining legacy of its $6.5 billion Spear Ledds & Kellogg acquisition from 2000. That Goldman was asking mere pennies on the dollar for the residual assets also showed just how "highly" Goldman valued said legacy operation.
This is what we saidat the time of the announcement: Moments ago we got the third and final "shocker" in this series of stunning disclosures by Goldman, this time involving Goldman's own "unlit" venue - one involving its own Dark Pool - the infamous, and market dominant Sigma X, which according to the WSJ, is about to be shut down!That this is a momentous development, if true, needs no explanation. Because while Sigma X may or may not be the top dark pool in the industry - a claim that Credit Suisse can possibly make alongside Goldman- Sigma X, which we have written about extensively over the past five years, certainly provides Goldman with not only extensive daily revenue but also gives the firm an inside look into what happens in the institutional marketplace, since the bulk of hedge funds and most mutual funds transact almost exclusively on dark pools now in an attempt to avoid precisely the parasitic HFT algos that have been the topic of so much discussion in recent days.
And if Goldman is willing to exit not only HFT, not only legacy lit markets entirely, but also its dark pool, then something truly big and transformational is coming to not only the existing market structure, but something that will be so disruptive, that for once we can't wait to find out just what Goldman has up its sleeves, sleeves which also happen to house the key lawmakers in the Beltway.
Why is Goldman doing this now? We don't know. It is worth noting however that on page 234 of Flash Boys, Michael Lewis cites Ron Morgan and Brian Levine, Goldman Partners and co-heads of Goldman's global stock markets, who said that "Unless there are some changes, there's going to be a massive crash, a flash crash times ten."
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Fantastic : Goldman Sachs is becoming honest !!!!
:):)