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Scientific Proof That High Frequency Trading Induces Adverse Changes In Market Microstructure And Dynamics, And Puts Market Fairness Under QuestionUp until recently, any debate between proponents and opponents of High Frequency Trading would typically be represented by heated debates of high conviction on either side, with discussions rapidly deteriorating into ad hominem attacks and the producer screaming 'cut to commercial' to prevent fistfights. Luckily, all this is about to change. In a research paper by Reginald Smith of the Bouchet Franklin Institute in Rochester titled "Is high-frequency trading inducing changes in market microstructure and dynamics?" the author finds that he...
Published on Sunday 1st of August 2010 01:05:10 AM
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Posted by admin! / Under HFT
In 2002, after 12 years at Bear Stearns, investment banker Adam Afshar came to the conclusion that, for all their supposed expertise, most Wall Street traders really weren't very good at predicting anything. "I got the sense from my time there," says Afshar, "that market analysts have little insight and generally provide very little value to their firms." So Afshar set out to find market opportunities in, as he puts it, "a more systematic way". The result was Hyde Park Global Investments, a small trading firm based in Atlanta, Georgia, that doesn't hire market analysts or portfolio managers. Instead, its...
Published on Sunday 1st of August 2010 01:05:10 AM
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How HFT Quote Stuffing Caused The Market Crash Of May 6, And Threatens To Destroy The Entire Market At Any Moment Submitted by Tyler Durden on 06/23/2010 16:16 -0500 Even as the idiots at the SEC mope about cluelessly, confirming they deserve not one cent of taxpayer money to fund their massively overbloated budget, and should all be summarily fired to collect tarballs in the Gulf of Mexico (and soon Maine), our friends at Nanex have conducted an exhaustive analysis (must read for everybody concerned about market structure), in which they identify the various parties responsible for the market crash,...
Published on Sunday 1st of August 2010 01:05:10 AM
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Posted by admin! / Under HFT
Well, we had another flash Crash yesterday, just like the one on May 6, 2010. The only difference is, this time the stocks in question went up instead of down. In case you missed it, Washington Post’s stock went from $458 to $900 per share in the blink of an eye. All the orders at $900 were cancelled and the market authorities did the usual, “move along folks, nothing to see here,” bit. The culprits in both incidents (May 6 and yesterday) were High Frequency Trading Programs (HFTPs). The HFTP industry (and lobbying efforts), always defend their actions by stating...
Published on Sunday 1st of August 2010 01:05:10 AM
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Posted by admin! / Under HFT
Above the Restoration Hardware in this Jersey Shore town, not far from the Navesink River, lurks a Wall Street giant. Here, inside the humdrum offices of a tiny trading firm called Tradeworx, workers in their 20s and 30s in jeans and T-shirts quietly tend high-speed computers that typically buy and sell 80 million shares a day. But on the afternoon of May 6, as the stock market began to plunge in the “flash crash,” someone here walked up to one of those computers and typed the command HF STOP: sell everything, and shutdown.Across the country, several of Tradeworx’s counterparts did...
Published on Sunday 1st of August 2010 01:05:10 AM
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Posted by admin! / Under HFT
The NY Times has blown the cover off the dark art known as "HFT", or "High-Frequency Trading", perhaps without knowing it.
Published on Sunday 1st of August 2010 01:05:10 AM
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Posted by admin! / Under HFT
<p>Can a market rally without investors? Low volume, with significant trading in just a few stocks, suggests that recent gains have come without them.</p><p>On Wednesday, the stock market continued its post-crisis run. The Dow Jones Industrial Average added 103.69 points to close at 11123.11. The S&P 500 climbed back over 1200, finishing at 1210.65. The Dow is now up 6.7% since the start of the year; the S&P is up 8.6%.</p>
Published on Sunday 1st of August 2010 01:05:10 AM
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Posted by admin! / Under HFT
The funny part: "I can assure you the Commission takes very seriously credible allegations of market manipulation and, through its examinations and investigations, is actively enforcing the securities laws on an ongoing basis." It's funny cause it's not true. We may, however, change our mind when the SEC issues a formal statement that it is pursuing enforcement and criminal action against the potential FDIC-based leaks on the BNY suspicious stock action last week. The sad part: "We will continue to use all tools at our disposal to aggressively pursue illegal market manipulation by high frequency traders and others." Sad because...
Published on Sunday 1st of August 2010 01:05:10 AM
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