Tag Archives: trading

Trading

Dark markets may be more harmful than high-frequency trading #HFT

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.

http://www.reuters.com/

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  • High-Speed Trading Isn't About Efficiency—It's About Cheating
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Trading

High-frequency traders can’t front-run anyone #HFT

There’s been recent debate on High Frequency Trading (HFT) offsetting traditional SIP trading protocols. The difference is due to technology, HFTs have access to direct feeds from various exchanges, SIP takes time to aggregates various exchanges’ order books. The claim that HFTs are able to front people is faise as the order is already in the market before the HFT can see it. HFTs never know what a customer’s order is before it’s in the market. HFTs have no customers. Just because it is fast doesn’t mean HFTs are cheating. This information is public and available to anyone willing to overcome the challenges of acquiring and processing it very quickly. This is just a case of technology overcoming an existing challenge within the industry or rather seeing an opportunity which is perfectly legal, safe and taking it. Much of the confusion around HFTs derives from a complicated market structure that makes perfectly legitimate behavior seem predatory to the uninitiated.

Just like in the mid-1800s, Paul Reuter created a network of carrier pigeons to more quickly disseminate news. His biggest customers? Financial firms, who predictably abandoned pigeons with the advent of the direct telegraph. The HFT is similar.

There is room for improvement in US and global equity market. The kinds of improvements that need to be implemented are mostly incremental: making the NBBO real-time, enforcing rigorously against any unfair advantage given to any participant, getting rid of the ban on zero-spread (i.e., locked) markets. These changes will improve transparency and reduce complexity. The HFT helps us push toward positive reform.

There are legitimate and interesting concerns about conflicts of interest, free rider problems and market integrity that need addressing. But these issues have nothing to do with HFT. So, even as we strive for improvements, we should try to understand that we have never in our history have seen a more level playing field in any equity market. Especially in a time when large equity firms like Warren Buffet enjoy a myraid of advantages that we’re okay with, this is a positive development.

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  • High-Speed Trading Isn't About Efficiency—It's About Cheating
    71
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Trading

Is the U.S. stock market rigged?

This month marks the fifth anniversary of the current bull market on Wall Street, making it one of the longest and strongest in history. Yet U.S. stock ownership is at a record low and less than half of Americans trust banks and financial services. And in the last two weeks, the New York attorney general and the Commodities Futures Trading Commission in Washington have both launched investigations into high-frequency computerized stock trading that now controls more than half the market.

 

The probes were announced just ahead of a much anticipated book on the subject by best-selling author Michael Lewis called “Flash Boys.” In it, Lewis argues that the stock market is now rigged to benefit a group of insiders that have made tens of billions of dollars exploiting computerized trading. The story is told through an unlikely cast of characters who figured out what was going on and have devised a plan to correct it. It could have a huge impact on Wall Street. Tonight, Michael Lewis talks about it for the first time.

Steve Kroft: What’s the headline here?

Michael Lewis: Stock market’s rigged. The United States stock market, the most iconic market in global capitalism is rigged.

http://www.cbsnews.com/

The Book : http://www.amazon.com/

 

 

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    Tags: trading, market, u.s, high-frequency, stock, michael, lewis, author, financial, book
  • Regulating high frequency trading
    67
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    Tags: market, trading, stock, financial, services, york, hft, global, high-frequency
  • High-speed traders are defending their practices in a newer, faster market.
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Trading

Why is #WallStreet so divorced from reality? A psychological explanation. @ryanlcooper

Noah Smith and Paul Krugman have both noted the strange fact that the financial class, almost across the board, continues to argue for more austerity and a tighter monetary policy, despite the adverse effects these policies could have on the economy as a whole. This kind of blinkered thinking is a hallmark of the 1 percent, which compared to the rest of the country is obsessed with deficit reduction and cutting social insurance.

http://theweek.com/

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Trading

Asset #Trading and Valuation with Uncertain Exposure

This paper considers an asset market where investors have private information not only about asset payoffs, but also about their own exposure to an aggregate risk factor. In equilibrium, rational investors disagree about asset payoffs: Those with higher exposure to the risk factor are (endogenously) more optimistic about claims on the risk factor. Thus, information asymmetry limits risk sharing and trading volumes. Moreover, uncertainty about exposure amplifies the effect of aggregate exposure on asset prices, and can thereby help explain the excess volatility of prices and the predictability of excess returns.

https://www.richmondfed.org/publications/research/working_papers/2014/pdf/wp14-05.pdf

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Trading

Why Are So Many #Traders (Literally) Killing Themselves?

This column is not about working too hard, or the dangers of high cholesterol, or lack of exercise. It is about a rash of suicides within the financial community. What this actually means is less certain than the reporting on it might imply.

Yesterday, 47-year-old Edmund Reilly, a trader at the Vertical Group, jumped in front of a Long Island Rail Road train, and was pronounced dead at the scene. That led to an article from the New York Post reporting that this was one of many recent suicides of people in the financial industry. IBT had a headline last fall “Suicide Among Bankers Appears To Be On The Rise Again As Pressures To Get Banks And Businesses Back In The Black Takes Its Toll.”

The Post was so kind as to include a list of a half-dozen other suicides this year by people working in finance. A quick search reveals many other finance suicides in recent months. “Banker Suicides” even has its own Wikipedia page.

http://www.bloombergview.com/

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Trading

#FX market manipulation – new software unveiled

Software AG  today unveiled the latest addition to its Apama market surveillance solution with alerts to identify FX (foreign exchange) market manipulation and benchmark fixing. Developed in partnership with tier one banks, these new alerts provide compliance and market monitoring personnel with in-depth monitoring of FX trading, to identify benchmark fixing, cross-liquidity venue manipulation and other suspicious behaviour. In addition, it enables trading institutions to customise real-time detection scenarios to meet business specific needs and to evolve surveillance in response to the latest regulatory demands.

http://www.fx-mm.com/

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Trading

Traders Beat #Market Indexes Borrowing Tools From Sports

Graham Davidson was in a slump, the worst he’d ever known.

In 15 years as a foreign-exchange trader in Sydney, New York and London, he’d always made money. Now, in the winter of 2011, he seemed to have lost his touch, Bloomberg Markets magazine will report in its April issue.

Davidson’s trades were all in the red — screaming, fire-engine red. And his mood had turned black. Self-doubt haunted every decision. He hesitated to put trades on. He jumped out of positions at the first hint of trouble, only to see the market turn again, racing ahead without him.

http://www.bloomberg.com/

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Trading

Russia invades Ukraine: beware of a risk off weekly opening

Russia invades Ukraine: beware of a risk off weekly opening

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Trading

Currency Traders’ Strategies Foiled as Trends Go Missing

Currency traders are having their worst start to a year since 2010 as a dearth of trends in major foreign-exchange markets crushes their investment strategies.

Deutsche Bank AG’s Currency Returns Index has dropped 0.3 percent since Dec. 31, dragged down by momentum trading, where investors looks for consistent moves in one direction. The gauge, which is also based on techniques including carry and valuation, rose in 2013 by the most in four years.

http://www.bloomberg.com/

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