birdog1960 Posted April 7, 2014 Author Share Posted April 7, 2014 (edited) an unlevel playing field? how do you level the playing field in the stock market, and how could it operate the way it does under those conditions? this issue looks like something that everybody needs to learn a little more about before taking up pitchforks & torches. I'll admit that I know little about HFT at this point, but exactly how much consequence is there with respect to affecting the market when we're talking mass trading of miniscule amounts over a couple of milliseconds? it just seems to me that it's a form of computerized insider trading based on trades that are already occurring. does anyone know if their own investments or retirement accounts are being effected for good, for ill, or at all? there's enough consequence that traders are spending 20 mm or so at a pop to win that millisecond race through better technology. when this story broke, the canadian that discovered it was asked to consult for many of the big name brokerage firms (eg t rowe price, vanguard, fidelity etc) and most have acted on his recommendations. that should tell you something about the scope of the problem. we're not talking about only individual investors (who were surely hurt) but also institutional investors. there's a great deal of money at stake here. what does $2 billlion for institutional investors in australia extrpolate to in the us exchanges? http://www.smh.com.au/business/markets/highspeed-trading-costs-investors-2b-say-industry-super-funds-20140407-367cz.html Edited April 7, 2014 by birdog1960 Link to comment Share on other sites More sharing options...
GG Posted April 7, 2014 Share Posted April 7, 2014 what does $2 billlion for institutional investors in australia extrpolate to in the us exchanges? http://www.smh.com.a...0407-367cz.html Reading comprehension? Link to comment Share on other sites More sharing options...
DC Tom Posted April 7, 2014 Share Posted April 7, 2014 And just to be clear, the unethical part is getting the price information from the exchanges ahead of executed trades, not HFT as a concept on its own. Nor are dark pools. You've always been able to trade stock away from the markets. Doesn't happen often...but I've done it. Link to comment Share on other sites More sharing options...
Jauronimo Posted April 7, 2014 Share Posted April 7, 2014 my charges are that the market is an extremelyunlevel playing field. it should be much more level and trustworthy. a few insiders possess great advantages that lead to even greater returns that cumulatively add to the ever increasing wealth concentration at the very top. in effect, the robber barons are back to their old tricks and are probably as or more efficient than they've ever been. i'll leave it to experts to remedy the situation but the iex seems a reasonable starting point. and no, the experts should not include anyone with a dog in the hunt. How are the super rich getting richer by stealing from themselves? While you continue to B word about wealth concentration maybe you should look at exactly where it occurs. Looks like the medical field is pumping out those 1% ers. But I suppose that's noble. http://www.nytimes.com/packages/html/newsgraphics/2012/0115-one-percent-occupations/ http://www.huffingtonpost.com/2011/10/18/1-percent-most-common-jobs_n_1017640.html In your example, the very people pushing for alternatives to remedy the problem are institutional asset managers tired of HFT adding basis to both sides of their trades. Are institutional traders now sympathetic parties? Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted April 7, 2014 Share Posted April 7, 2014 And just to be clear, the unethical part is getting the price information from the exchanges ahead of executed trades, not HFT as a concept on its own. I agree wholeheartedly. Link to comment Share on other sites More sharing options...
Tiberius Posted April 7, 2014 Share Posted April 7, 2014 Heard about this last week on the daily show. Nice to see how Lewis continues to make millions walking away from Wall Street but always willing to write about how much he hates it. Jealous? Link to comment Share on other sites More sharing options...
birdog1960 Posted April 7, 2014 Author Share Posted April 7, 2014 How are the super rich getting richer by stealing from themselves? While you continue to B word about wealth concentration maybe you should look at exactly where it occurs. Looks like the medical field is pumping out those 1% ers. But I suppose that's noble. http://www.nytimes.c...nt-occupations/ http://www.huffingto..._n_1017640.html In your example, the very people pushing for alternatives to remedy the problem are institutional asset managers tired of HFT adding basis to both sides of their trades. Are institutional traders now sympathetic parties? you need a subset analysis to comprehend the point: http://www.cnbc.com/id/101540240. yes, institutional traders are sympathetic parties. they largely represent the cumulative investments of regular people. many of the jobs in the tiny group where massive wealth concentration is occurring are in the financial sector. Link to comment Share on other sites More sharing options...
GG Posted April 7, 2014 Share Posted April 7, 2014 How are the super rich getting richer by stealing from themselves? While you continue to B word about wealth concentration maybe you should look at exactly where it occurs. Looks like the medical field is pumping out those 1% ers. But I suppose that's noble. http://www.nytimes.c...nt-occupations/ http://www.huffingto..._n_1017640.html In your example, the very people pushing for alternatives to remedy the problem are institutional asset managers tired of HFT adding basis to both sides of their trades. Are institutional traders now sympathetic parties? And of course what's missing from the public discourse is whether the existence of of HFTs has contributed to the tightening of the bid/ask spreads over the last decade? I don't know if definitive data exists, but simply crying that HFTs skim a hundredth of a penny of every stock sale kind of misses the point if in aggregate, HFT compress the actual spreads by a few cents. Never mind that people tend to ignore the old days when the spreads were consistently $0.125 - $0.25, and broker commissions were in the $100's. Now the spreads are a few cents on a highly liquid stock and a commission is $8. Yeah, the little guy is getting screwed. Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted April 7, 2014 Share Posted April 7, 2014 And of course what's missing from the public discourse is whether the existence of of HFTs has contributed to the tightening of the bid/ask spreads over the last decade? I don't know if definitive data exists, but simply crying that HFTs skim a hundredth of a penny of every stock sale kind of misses the point if in aggregate, HFT compress the actual spreads by a few cents. Never mind that people tend to ignore the old days when the spreads were consistently $0.125 - $0.25, and broker commissions were in the $100's. Now the spreads are a few cents on a highly liquid stock and a commission is $8. Yeah, the little guy is getting screwed. Interesting point, though I'd want to review the data before breaking either way on this particular potential "benefit" of HFT. Link to comment Share on other sites More sharing options...
Azalin Posted April 7, 2014 Share Posted April 7, 2014 (edited) there's enough consequence that traders are spending 20 mm or so at a pop to win that millisecond race through better technology. when this story broke, the canadian that discovered it was asked to consult for many of the big name brokerage firms (eg t rowe price, vanguard, fidelity etc) and most have acted on his recommendations. that should tell you something about the scope of the problem. we're not talking about only individual investors (who were surely hurt) but also institutional investors. there's a great deal of money at stake here. but the HFT activity is on trades that have already happened (from the purchaser's standpoint) - they simply jump in front of another trade that's about to happen and make the purchase as well. all I'm saying is that it may or may not be ethical.....I am going to wait until I understand the process better before rendering my judgement. Edited April 7, 2014 by Azalin Link to comment Share on other sites More sharing options...
GG Posted April 7, 2014 Share Posted April 7, 2014 but the HFT activity is on trades that have already happened (from the purchaser's standpoint) - they simply jump in front of another trade that's about to happen and make the purchase as well. all I'm saying is that it may or may not be ethical.....I am going to wait until I understand the process better before rendering my judgement. To clarify, Lewis and IEX don't slam all HFTs, just the guys who build direct fiber links to the exchanges and get their market pricing information from the exchange. Their close proximity to the exchange and those fiber connections allow them to execute a trade much faster than an order coming from another trading platform. That's how the scheme got exposed, a trader sees a price at $100.00, puts in a buy order, but before it fills, the price jumps to $100.001, and that was happening regularly. So someone was obviously getting ahead of the trader on every order. That is of course a bit sleazy. But again, there's considerable debate in whether HFT's large order volumes compress the price. For all we know, without HFTs that stock quote would have been $100.02. IEX does bring up a good point that you can have the benefits of HFT without the exchanges providing data, or at least masking the source of the data, and that will slow down the front running. But that could also slow down the HFT activity, and the trading spreads may widen again, I don't know enough beyond` this analysis, but Lewis's point is completely one-sided and doesn't discuss the net cost and impact to both sides of a trading transaction. Link to comment Share on other sites More sharing options...
Jauronimo Posted April 7, 2014 Share Posted April 7, 2014 you need a subset analysis to comprehend the point: http://www.cnbc.com/id/101540240. yes, institutional traders are sympathetic parties. they largely represent the cumulative investments of regular people. many of the jobs in the tiny group where massive wealth concentration is occurring are in the financial sector. Really? What % of the "stock market winners" cited in that article actually work on Wall St? What % of CEOs and entrepreneurs work on Wall St? Are the nameless, faceless bankers benefiting from HFT? Anytime there's some type of Wall Street scandal you fit it in to your wealth concentration/robber baron narrative and it makes no sense within this context. Link to comment Share on other sites More sharing options...
birdog1960 Posted April 7, 2014 Author Share Posted April 7, 2014 Really? What % of the "stock market winners" cited in that article actually work on Wall St? What % of CEOs and entrepreneurs work on Wall St? Are the nameless, faceless bankers benefiting from HFT? Anytime there's some type of Wall Street scandal you fit it in to your wealth concentration/robber baron narrative and it makes no sense within this context. how many regular folks have 20 million to gamble on hyperdrive data lines? who is funding that type of investment? Link to comment Share on other sites More sharing options...
GG Posted April 7, 2014 Share Posted April 7, 2014 you need a subset analysis to comprehend the point: http://www.cnbc.com/id/101540240. yes, institutional traders are sympathetic parties. they largely represent the cumulative investments of regular people. many of the jobs in the tiny group where massive wealth concentration is occurring are in the financial sector. As always, the article you posted, has nothing to do with the topic at hand. Link to comment Share on other sites More sharing options...
birdog1960 Posted April 7, 2014 Author Share Posted April 7, 2014 As always, the article you posted, has nothing to do with the topic at hand. nope. it was in response to jauronimo's criticism. it has everything to do with that. Link to comment Share on other sites More sharing options...
Jauronimo Posted April 7, 2014 Share Posted April 7, 2014 how many regular folks have 20 million to gamble on hyperdrive data lines? who is funding that type of investment? I'm not going to explain general corporate finance and capital projects to you. Link to comment Share on other sites More sharing options...
GG Posted April 7, 2014 Share Posted April 7, 2014 nope. it was in response to jauronimo's criticism. it has everything to do with that. It has less than zero to do with what he posted, other than both he and you used the term "institutional traders" Link to comment Share on other sites More sharing options...
Jauronimo Posted April 7, 2014 Share Posted April 7, 2014 (edited) nope. it was in response to jauronimo's criticism. it has everything to do with that. No, your article mentioned stock market winners. Stock market winners aren't the guys working on wall st and they aren't benefiting from HFT. Take a look at wealthiest families in this country and see how many of them appear on this list. http://www.cnbc.com/id/39038892 Edited April 7, 2014 by Jauronimo Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted April 7, 2014 Share Posted April 7, 2014 how many regular folks have 20 million to gamble on hyperdrive data lines? who is funding that type of investment? ... That seals it. You have no idea what you're talking about. Link to comment Share on other sites More sharing options...
birdog1960 Posted April 7, 2014 Author Share Posted April 7, 2014 No, your article mentioned stock market winners. Stock market winners aren't the guys working on wall st and they aren't benefiting from HFT. Take a look at wealthiest families in this country and see how many of them appear on this list. http://www.cnbc.com/id/39038892 who said anything about old money? it's concentration of money that's at issue. ATD sold for 700mm. i'm guessing the founder is in the .01%. most likely all on the list are. and they were likely financed by others already in that group. and this concentration has all materialized from gaming an already corrupt system. i'm not claiming it's the root of the problem but it's certainly a symptom and folks like you see it as ok. i don't. Link to comment Share on other sites More sharing options...
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