High speed trades...

[Semillon]

I found this rather interesting:

http://www.nytimes.com/2009/07/24/business/24trading.html?_r=1&hp

 

[Naked shorts]

I found this rather interesting:

http://www.nytimes.com/2009/07/24/business/24trading.html?_r=1&hp

Thanks, you just reminded my why I don't read the tabloid infested NY-Times. No need to display the facts, just make a story out of nothing that will rile the public up so as to sell as many papers as possible.

 

[cutz]

That's funny,

I was reading that same article in the fin review today, thought it was a little strange. I was under the impression that these programs have always been in place exploiting arbitrage opportunities, something that's been out of reach of retail traders anyhow.

Maybe some intraday scalpers can shed some light.

 

[Uncle Festivus]

Thanks, you just reminded my why I don't read the tabloid infested NY-Times. No need to display the facts, just make a story out of nothing that will rile the public up so as to sell as many papers as possible.

Right again NS. Just a figment of Goldman Sachs imagination, only they made $3B or so out of it. Check your facts.....and perhaps read the entire story?

 

[Timmy]

I must say I thought the story very light on facts. There is a post on ASF somewhere that goes into more detail on how these things actually work.

What you basically have is, if I can generalise and summarise outrageously:

1. A regulation that skews information flows:

While markets are supposed to ensure transparency by showing orders to everyone simultaneously, a loophole in regulations allows marketplaces like Nasdaq to show traders some orders ahead of everyone else in exchange for a fee.

Quote from linked article (in the OP).

2. Rebates paid on transactions by some exchanges (in the US there is not an effective monopoly on share transactions that the ASX has, there are are multiple 'exchanges'). These rebates were alluded to in the quoted article, but not explained. The post elsewhere I referred to has a better explanation, I can dig out the link if anyone is interested.

3. Some clever work by private firms to exploit both the information skew and the rebates in order to profit.

For me, points 1 and 2 need to be looked at by the regulators. Point 3 is what makes the world go around and is not a problem.

 

[Semillon]

Thanks, you just reminded my why I don't read the tabloid infested NY-Times. No need to display the facts, just make a story out of nothing that will rile the public up so as to sell as many papers as possible.

This is the kind of response that makes people not want to contribute to a forum. Why all the hostility?

If you think the article is BS, fine, show some facts of your own to support such a position.

 

[Timmy]

I think any hostility NShorts may have is aimed at the NYTimes, not at yourself Semillon.

 

[Semillon]

Some blogged opinion I stumbled accross:

http://www.smbtraining.com/blog/?p=1566

 

[DVEOUS]

Are you suggesting I should upgrade my Tandy CoCo2 computer with 64k RAM and cassette tape drive, for something more modern?

 

[Krusty the Klown]

Are you suggesting I should upgrade my Tandy CoCo2 computer with 64k RAM and cassette tape drive, for something more modern?

LOL, I had one of those, except when I first bought it, it only had 16K of RAM and that was it!!!!

 

[cuttlefish]

Seems like a bit of a beat up. To be affected by this significantly you'd have to be trading some pretty high volumes. The flash order thing seems unfair but I can't see how is this sort of thing going to have any significant affect the average punter with an itchy trigger finger - at best its giving the high speed traders a miniscule edge that can easily be wiped out by other factors.

 

[Uncle Festivus]

Seems like a bit of a beat up. To be affected by this significantly you'd have to be trading some pretty high volumes. The flash order thing seems unfair but I can't see how is this sort of thing going to have any significant affect the average punter with an itchy trigger finger - at best its giving the high speed traders a miniscule edge that can easily be wiped out by other factors.

No it's real, in fact they are trying to get either the SEC to amend the rules or some legislation to prevent it happening.

https://www.aussiestockforums.com/forums/showthread.php?t=16241

July 25 (Bloomberg) -- Charles Schumer, the third-ranking Democrat in the U.S. Senate, asked the Securities and Exchange Commission to ban so-called flash orders for stocks, saying they give high-speed traders an unfair advantage.

The Schumer letter follows concerns expressed by investors and traders that computer-driven strategies executing hundreds of trades a minute make stock prices more volatile and boost costs. NYSE Euronext, operator of the New York Stock Exchange, estimates that about 46 percent of daily volume is executed through high-frequency strategies.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aO8DoToaITO8

 

[Knobby22]

Bronte, whom I greatly respect, has knocked this story on the head. There are serious issues though.

http://brontecapital.blogspot.com/

Also check out the following blog, there is a job if you have a sonic screwdriver.

 

[Timmy]

At least some of these guys in the SEC are doing their research, reading ASF, and responding to our demands :

SEC to Ban Flash Trades of U.S. Stocks, Schumer Says

 

[Timmy]

Here is a link to a podcast from Bloomberg Radio about high frequency trading. The podcast goes for about half an hour, the first 15 minutes are about high frequency trading.

http://media.bloomberg.com/bb/avfile/Markets/Analyst_Calls/vrT.qGWIoYPk.mp3

For those who like to wear tinfoil hats, this podcast was on Bloomberg Radio on August 20 (a couple of days ago) and has since been removed from their listing (the link is an artifact, may not last long). If you do download and listen to it, please watch out for black helicopters.