birdog1960 Posted April 7, 2014 Share Posted April 7, 2014 with all the financial guys that frequent this board, it's surprising there hasn't been a raging debate on this newly publicized and highly debated topic. http://finance.yahoo.com/blogs/daily-ticker/hft-uproar-revives-calls-for-“trading-tax-”-other-bad-ideas-150311158.html/. comments? Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted April 7, 2014 Share Posted April 7, 2014 (edited) It's a case law being behind technology. It's currently perfectly legal, though it's likely that it should not be. However, in the absence of law, the market seems to be sorting it out, and will largely do away with the problem. Edited April 7, 2014 by TakeYouToTasker Link to comment Share on other sites More sharing options...
birdog1960 Posted April 7, 2014 Author Share Posted April 7, 2014 It's a case law being behind technology. It's currently perfectly legal, though it's likely that it should not be. However, in the absence of law, the market seems to be sorting it out, and will largely do away with the problem. um hmmm.... after they we're caught. seems this was all common knowledge to many in the industry. Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted April 7, 2014 Share Posted April 7, 2014 um hmmm.... after they we're caught. seems this was all common knowledge to many in the industry. The industry was aware of the high frequency trading, but not how it works, and of how it was harming the major players within the industry, and their customers. The major finance houses only recently learned how this "skimming" works. Brad Katsuyama has been in boardrooms across the country educating about it. Link to comment Share on other sites More sharing options...
Jauronimo Posted April 7, 2014 Share Posted April 7, 2014 What is your opinion on any of the half-dozen topics briefly touched on in the article? If these exchanges are providing best execution by filling orders with "high frequency traders" operating in these pools of the damned, then I don't see an issue. If the pay for deal flow arrangements aren't in the best interest of the client, then there's an issue. Personally, I don't understand the fuss over high frequency trading. If you want to try and grind out fractions of a penny by front running on the investment decisions of others then good !@#$ing luck. It can and does generate money but coupled with less efficient pricing and increasing volatility, its getting more and more risky. You're asking for trouble. Market pricing has become less efficient naturally since the crash in 2008. Funds have shifted away from active investors into more passive strategies. The rise of ETF's has really hurt active investors and by extension pricing efficiency. The constant re-balancing has also increased volatility. That sounds scary, but where there's inefficiency there's opportunity for fundamental and value investors. I don't think we are nearing a point where our markets are at risk of losing integrity. I expect a shift back to active managers down the line as market efficiency creates opportunity and above market gains for active strategies. Link to comment Share on other sites More sharing options...
birdog1960 Posted April 7, 2014 Author Share Posted April 7, 2014 What is your opinion on any of the half-dozen topics briefly touched on in the article? If these exchanges are providing best execution by filling orders with "high frequency traders" operating in these pools of the damned, then I don't see an issue. If the pay for deal flow arrangements aren't in the best interest of the client, then there's an issue. Personally, I don't understand the fuss over high frequency trading. If you want to try and grind out fractions of a penny by front running on the investment decisions of others then good !@#$ing luck. It can and does generate money but coupled with less efficient pricing and increasing volatility, its getting more and more risky. You're asking for trouble. Market pricing has become less efficient naturally since the crash in 2008. Funds have shifted away from active investors into more passive strategies. The rise of ETF's has really hurt active investors and by extension pricing efficiency. The constant re-balancing has also increased volatility. That sounds scary, but where there's inefficiency there's opportunity for fundamental and value investors. I don't think we are nearing a point where our markets are at risk of losing integrity. I expect a shift back to active managers down the line as market efficiency creates opportunity and above market gains for active strategies. read lewis' own words here: http://www.npr.org/2014/04/01/297686724/on-a-rigged-wall-street-milliseconds-make-all-the-difference. the canadian discovering this has an equally interesting take. this is front running, plain and simple. it amounts to a tax on every outside investor for virtually every trade. and a proposed solution is to let the industry regulate itself? i don't think so. Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted April 7, 2014 Share Posted April 7, 2014 read lewis' own words here: http://www.npr.org/2014/04/01/297686724/on-a-rigged-wall-street-milliseconds-make-all-the-difference. the canadian discovering this has an equally interesting take. this is front running, plain and simple. it amounts to a tax on every outside investor for virtually every trade. and a proposed solution is to let the industry regulate itself? i don't think so. It has already begun to in the absence of law. Link to comment Share on other sites More sharing options...
John Adams Posted April 7, 2014 Share Posted April 7, 2014 Like all of Lewis's books, Flash Boys was a good read. Not Liar's Poker or The Big Short good, but good. It's hard to see how HFT trading is good for the system, especially when some firms are front-running their own clients and it puts the entire system at risk of the flash crashes. Link to comment Share on other sites More sharing options...
birdog1960 Posted April 7, 2014 Author Share Posted April 7, 2014 that's reassuring....you'll have to forgive the rest of us if we don't trust the foxes to guard the henhouse given the last few decades in history. Link to comment Share on other sites More sharing options...
Joe Miner Posted April 7, 2014 Share Posted April 7, 2014 that's reassuring....you'll have to forgive the rest of us if we don't trust the foxes to guard the henhouse given the last few decades in history. Please explain. Link to comment Share on other sites More sharing options...
meazza Posted April 7, 2014 Share Posted April 7, 2014 read lewis' own words here: http://www.npr.org/2...-the-difference. the canadian discovering this has an equally interesting take. this is front running, plain and simple. it amounts to a tax on every outside investor for virtually every trade. and a proposed solution is to let the industry regulate itself? i don't think so. 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. Link to comment Share on other sites More sharing options...
birdog1960 Posted April 7, 2014 Author Share Posted April 7, 2014 (edited) 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. does that in some way diminish the importance of the book.? of the trader that made public the scam? a story this big and your immediate concern is the writer's motivation? Edited April 7, 2014 by birdog1960 Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted April 7, 2014 Share Posted April 7, 2014 does that in some way diminish the importance of the book.? of the trader that made public the scam? a story this big and your immediate concern is the writer's motivation? So lay forth your charges, and tell us what should be done. Link to comment Share on other sites More sharing options...
GG Posted April 7, 2014 Share Posted April 7, 2014 with all the financial guys that frequent this board, it's surprising there hasn't been a raging debate on this newly publicized and highly debated topic. http://finance.yahoo...-150311158.html/. comments? No, just waiting for a mouth breather who was appalled by the news coverage of the blatant inequity in the equities markets to sop up the story peddled by journalists who don't understand it. It is legal, but borderline unethical. But the skimming of the spreads by front running the information is minuscule compared to the bid ask spread. The little guy is not getting hurt as much as the stories would make you believe, unless you think that $1-$2/year is a big vig to pay HFT to provide liquidity to the market. Link to comment Share on other sites More sharing options...
meazza Posted April 7, 2014 Share Posted April 7, 2014 does that in some way diminish the importance of the book.? of the trader that made public the scam? a story this big and your immediate concern is the writer's motivation? All I'm saying is that Michael Lewis is a sensationlist. Link to comment Share on other sites More sharing options...
birdog1960 Posted April 7, 2014 Author Share Posted April 7, 2014 So lay forth your charges, and tell us what should be done. 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. Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted April 7, 2014 Share Posted April 7, 2014 It is legal, but borderline unethical. Agreed. But the skimming of the spreads by front running the information is minuscule compared to the bid ask spread. The little guy is not getting hurt as much as the stories would make you believe, unless you think that $1-$2/year is a big vig to pay HFT to provide liquidity to the market. And there's the rub. Lewis, nor CBS, is telling this side of the story: high frequency traders do, in fact, provide the large amount of liquidity to the market place; and they also significantly reduce the costs of trading for investors. Link to comment Share on other sites More sharing options...
GG Posted April 7, 2014 Share Posted April 7, 2014 Agreed. 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. Link to comment Share on other sites More sharing options...
Azalin 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. 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? Link to comment Share on other sites More sharing options...
Jauronimo Posted April 7, 2014 Share Posted April 7, 2014 read lewis' own words here: http://www.npr.org/2...-the-difference. the canadian discovering this has an equally interesting take. this is front running, plain and simple. it amounts to a tax on every outside investor for virtually every trade. and a proposed solution is to let the industry regulate itself? i don't think so. You understood nothing in my post. Link to comment Share on other sites More sharing options...
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