Daily Archives: June 21, 2014

Trading

As Asness Proclaims His Love For High Speed Trading, Are Issues Ignored?

The issues that remain un-addressed are most important, as flash crashes have significantly grown and the core legality of certain HFT practices remains unquestioned in most public debate

Investment management magnet Cliff Asness has a problem with a Bloomberg View piece on High Frequency Trading (HFT) with particular focus on issues brought up by Michael Lewis in the book Flash Boys. While he makes good points, the real mastery of the HFT debate is how the key issues remain undiscussed.

http://www.valuewalk.com/2014/06/asness-high-speed-trading/

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    The release of the latest Michael Lewis book, “Flash Boys,” and the subsequent report on “60 Minutes” has reignited the debate over the purpose and value of high-frequency trading (HFT). Like many innovations, HFT had some noble objectives when it first started (to improve both the cost and timing of…
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    A once esoteric corner of the stock market —- “order types” —- has taken center stage the past few years in the debate about the health of the market, the role of high-speed traders in it and how stock exchanges interact with clients. A big reason for the scrutiny: Order…
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    On February 12, 2014, starting at 13:31 and running right up to market close, a high frequency trading (HFT) algo placed and canceled 5,000 to 30,000 orders per second in individual stocks and ETFs. Many seconds had more than 20,000 bogus orders. There were 30 symbols affected: all beginning with…
    Tags: hft, high, frequency, trading
  • The truth about insider trading. @turneyduff #HFT #InsiderTrading
    81
    I wonder if SAC Capital's Steve Cohen sent Michael Lewis a thank-you note. Lately, it seems like all anyone can talk about is high-frequency tradingand the new book "Flash Boys." But long before there was HFT, there was insider trading. There's a common perception (fueled by a rabid media) that insider…
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Trading

Why I Love High-Speed Trading by @Cimmerian999

Separately, and along with my colleagues Aaron Brown, Michael Mendelson and Hitesh Mittal, I have written several articles on high-frequency trading. We believe HFT has lowered investors’ trading costs and that many of the attacks on it are misguided. We have expressed concern that our fragmented, domestic trading infrastructure is technologically risky and due for a hard look, separate from allegations about HFT. Finally, we’ve noted the obvious: that while defending HFT broadly, we can’t and wouldn’t vouch that each HFT trader acts lawfully and ethically (nor would we do so for each Good Humor ice cream salesman).

Bloomberg View contributor Noah Smith recently wrote on HFT. I haven’t responded to other articles on HFT, but Smith focuses directly on our writings and his overall conclusion is very similar to ours, though far more equivocal. So, I will make an exception and respond to Smith — rather than to the legion of rather nutty pieces out there — out of respect, not ire.

First things first. Smith calls me a “hedge fund magnate.” Although being a magnate sounds kind of cool, my firm — AQR Capital Management — is more of a diversified-investment manager than a hedge fund. We manage a lot of traditional funds as well as hedge funds. In the hedge-fund space, AQR is known for demystifying strategies and rationalizing fees (in other words, lowering them), so the whole label is a little off. Still, it’s more interesting and punchy than “the senior guy at a midsize investment manager” and clearly “magnate” is better for me than “plutocrat,” “oligarch” or “fat cat,” so maybe I should feel lucky.

http://www.bloombergview.com/

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  • High-Speed Trading Isn't About Efficiency—It's About Cheating
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  • As Asness Proclaims His Love For High Speed Trading, Are Issues Ignored?
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    The issues that remain un-addressed are most important, as flash crashes have significantly grown and the core legality of certain HFT practices remains unquestioned in most public debate Investment management magnet Cliff Asness has a problem with a Bloomberg View piece on High Frequency Trading (HFT) with particular focus on issues brought…
    Tags: hft, trading, michael, view, good, management, love, investment, bloomberg
  • Regulating high frequency trading
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    Thank you for that kind introduction. And my sincere thanks to everyone here for joining this lunchtime session. It’s a great pleasure and privilege to return to New York. I want to offer a few reflections this afternoon on market innovation and, in particular, the on-going debate around high frequency…
    Tags: trading, feel, clearly, firm, kind, hft, high-frequency
  • How One Whistleblower Turned the Tables on High-Frequency Traders
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    A once esoteric corner of the stock market —- “order types” —- has taken center stage the past few years in the debate about the health of the market, the role of high-speed traders in it and how stock exchanges interact with clients. A big reason for the scrutiny: Order…
    Tags: high-speed, trading, hft
Europe, NoTrading, Startup, trend

Klarna is the next big thing in Internet payments

PayPal revolutionized the way we buy things online, but Klarna is the next big thing in Internet payments, according to famed venture capitalist Michael Moritz.

Moritz made early investments in Google (GOOGL, Tech30), LinkedIn (LNKD, Tech30),Yahoo (YHOO, Tech30) and eBay’s (EBAY, Tech30) PayPal. His firm, Sequoia Capital, has been investing millions in Klarna over the past few years. He is impressed with how the Swedish company’s technology makes online transactions easier, cutting out passwords and the traditionally slow registration process.

“We’ve invested in payments for a good long time and had started doing that in the 1990s,” Moritz told CNNMoney. “We had been an early investor in PayPal. But that was a long time ago. That was almost 15 years ago now. And the world moves on and changes, particularly with the advent of mobile computing … there’s a vast new landscape to conquer.”

http://money.cnn.com/

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Economy, trend

Amazon May Have Just Created a Weapon of Mass Consumption

With its announcement of a new smartphone this week, Amazon unveiled advanced camera technology that could arguably be called “point and shoot yourself in the foot.”

Amazon’s foray into smartphones includes image-recognition technology that lets consumers point the phone at a product to buy it from its online store. The phone’s Firefly button recognizes more than 70 million products, the company says. Mixing compulsive smartphone usage with the instant gratification of point-and-purchase could take impulse spending to a new level. Within minutes of the announcement, the twitterverse saw the potential: “Amazon launches a shopping machine,” one person tweeted, “calls it a smartphone.”

But shopping convenience may come at a high cost for some people. The more removed people are from purchasing with cash the more they tend to overspend, behavioral finance experts say. Research shows that when people pay with plastic they can spend 20 percent to 30 percent more than when they use cash, says Denise Hughes, a financial coach based in San Carlos, California. Casinos use chips, behavioral experts note, to also remove the regulating “pain of paying.”

The phone could remove “frictions and barriers” — like taking out a wallet — that get people to think about purchases in a less emotional way, says Dan Ariely, behavioral economics professor at Duke University’s Fuqua School of Business. “The ability to act very quickly on our emotions is going to simply get people to buy more impulsive things,” he says. And those things, he adds, aren’t going to be vitamins or long-term savings bonds. “They’d buy stuff that is more shiny and tempting at the moment, like the new Amazon phone.”

http://www.bloomberg.com/

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