Posts Tagged ‘Dark Pools’

The Road to World War III – The Global Banking Cartel Has One Card Left to Play

The Road to World War III – The Global Banking Cartel Has One Card Left to Play

By David DeGraw (h/t ZH)

The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.

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Editor’s Note: The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.

I: Economic Imperial Operations

The Road to World War III - The Global Banking Cartel Has One Card Left to PlayWhen we analyze our current crisis, focusing on the past few years of economic activity blinds us to the history and context that are vital to understanding the root cause. What we have been experiencing is not the result of an unforeseen economic crash that appeared out of the blue with the collapse of the housing market. It was certainly not brought on by people who bought homes they couldn’t afford. To frame this crisis around a debate on economic theory misses the point entirely. To even blame it on greedy bankers,…
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Dark Pools and Adverse Selection

Dark Pools and Adverse Selection

Courtesy of Tim at The Psy-Fi Blog 

15th December 1883:  Two highwaymen force a group of travellers to hand over their valuables on the King's Highway. Original Artwork: After Dadd. Original Publication: Illustrated London News - The King's Highway - pub. 1883  (Photo by HultonArchive/Illustrated London News/Getty Images)

Friendly Highwaymen

Scientists believe that a great deal of the universe is in hiding, being made up of dark matter which, rather inconveniently, refuses to interact with anything else and is therefore almost undetectable. In a similar fashion many stockmarket trades are now being carried out in so called dark pools, where they’re supposed to be similarly undetectable. Unfortunately, despite what many users of them think, you don’t need to construct a super-collider to detect trades in dark pools.

These dark pools are one way for investors to move large blocks of stock without alerting others to what they’re doing. They’re anonymous trades of indeterminate volume carried out in murky corners of the securities industry. As usual the industry argues that it’s doing investors a favour. That’s “favour” in the same way that a highwayman saved his victims from having to carry heavy bags of money about.

Off Market Mechanisms

Now you might think that the very act of trading large volumes without moving the market is a somewhat dubious practice given that the very idea of a market is to ensure transparency through price discovery. However markets don’t so much frown on this practice as positively welcome it. Yet even though dark pools, where private investors are excluded, are expanding rapidly they’re not quite so dark as many users imagine.

In essence dark pools are trading platforms which circumvent the normal stock exchanges. Everything happens off-market and everyone goes to great trouble to avoid publishing trading volumes – it’s not possible to know in real-time, and sometimes not ever, how much stock is being traded (although most trades are published after the event). The rationale behind this is for participants is to stop prices moving against them. Typically, in an open market if you attempt to buy or sell a large block of shares then the price will move up or down in response to this. Much effort is devoted to trying to prevent this happening, dark pools being only one method.

Price Setting on the Dark Side

However, if you don’t have open market price setting there’s got to be some other way of figuring out how to price a trade. Neatly dark pools parasitize open markets by using the mid-price of openly traded stocks. In theory this means that dark…
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“The Chief Executive [of Giant Dark Pool Said] the Amount of Money Devoted to High-frequency Trading Could ‘QUINTUPLE Between this Year and Next’”

“The [Head of One of the Biggest Dark Pools Said] the Amount of Money Devoted to High-frequency Trading Could ‘QUINTUPLE Between this Year and Next’"

Courtesy of Washington’s Blog

In a must-read essay, Senator Ted Kaufman reveals that – despite all of the talk coming out of Washington – high-frequency trading is set to explode:

We’ve gone from an era dominated by a duopoly of the New York Stock Exchange and Nasdaq to a highly fragmented market of more than 60 trading centers. Dark pools, which allow confidential trading away from the public eye, have flourished, growing from 1.5 percent to 12 percent of market trades in under five years.

Competition for orders is intense and increasingly problematic. Flash orders, liquidity rebates, direct access granted to hedge funds by the exchanges, dark pools, indications of interest, and payment for order flow are each a consequence of these 60 centers all competing for market share.

Moreover, in just a few short years, high frequency trading – which feeds everywhere on small price differences in the many fragmented trading venues – has skyrocketed from 30 to 70 percent of the daily volume.

Indeed, the chief executive of one of the country’s biggest block trading dark pools was quoted two weeks ago as saying that the amount of money devoted to high-frequency trading could "quintuple between this year and next."

Mr. President, we have no effective regulation in these markets.

Last week, Rick Ketchum, the Chairman & CEO of the Financial Industry Regulatory Authority – the self-regulatory body governing broker-dealers – gave a very thoughtful and candid speech, which I applaud. In it, Mr. Ketchum admitted that we have inadequate regulatory market surveillance.

His candor was refreshing but also ominous: "There is much more to be done in the areas of front-running, manipulation, abusive short selling, and just having a better understanding of who is moving the markets and why."

Mr. Ketchum went on to say:

[T]here are impediments to regulatory effectiveness that are not terribly well understood and potentially damaging to the integrity of the markets…The decline of the primary market concept, where there was a single price discovery market whose on-site regulator saw 90-plus percent of the trading activity, has obviously become a reality. In its place are now two or three or maybe four regulators all looking at an incomplete picture of


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Goldman’s Dissembling (Dark Pools et.al.)

Here’s Karl’s take on Goldman Sachs’s story that they are doing us all a favor:  Oh Really? – Ilene

Goldman’s Dissembling (Dark Pools et.al.)

Record Earnings Lead To Big Bonuses On Wall Street

Courtesy of Karl Denninger at The Market Ticker

Now comes Goldman with yet another pack of misdirection:

Goldman told the Securities and Exchange Commission that computer-driven trading and an increase in stock transactions that occur off public exchanges has reduced consumer costs, increased competition and brought more liquidity to markets.

“The investing community (especially retail) has benefited from the evolving market structure and industry competition,” Goldman Sachs said in a summary of the 55-page report submitted to the agency.

You have to love the general gist of this thing.

Let’s break down what’s really going on here, because it is both instructive and, in my opinion, necessary.

Dark pools and High Frequency Trading reduce transparency.  The argument raised by Goldman and others is that these venues "improve price" for retail investors (and others), such as mutual funds (held by many retail investors.)  The problem is that this is the wrong metric to apply.

Trading in established stocks is in fact a negative sum game.  That is, for every share I get a "better price" on as a buyer, the seller gets a lower price.  Worse, since there there are commissions and fees involved in all transactions, the net effect of each trade is to dilute the total capital base in the system.

An example will serve to show this:

$1,100 in total money in the system.
100 shares @ $10 "quoted".
Taxes, commissions and exchange fees of 1% of the transaction.

The buyer and seller transact all 100 shares.  There is now $1,090 in total money (the other $10 has been siphoned off in commissions and fees.)

Do it again.  There is now $1,080 (another $10 has been siphoned off.)

Perform 10 transactions and oops – there isn’t enough money to transact an 11th time.

Now here’s the rub – the amount of "spread" that the market maker, which would be Goldman (among many others) can make is entirely dependent on the ability to hide the actual bid and offer by real investors!

That is, let’s assume that of the $10 in commissions and fees Goldman…
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Dark Pools, Goldman Front Running

Dark Pools, Goldman Front Running

Courtesy of Financial Ninja Ben

[ HT Displaced EMA ]

FN: Goldman Sachs (GS) could be using Dark Pools to front run order flow.

 


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Phil's Favorites

Kurds targeted in Turkish attack include thousands of female fighters who battled Islamic State

 

Kurds targeted in Turkish attack include thousands of female fighters who battled Islamic State

Courtesy of Haidar Khezri, University of Central Florida

Kurdish fighters under attack by Turkey have described President Donald Trump’s decision to withdraw U.S. troops from northern Syria as a “stab in the back.”

Since bombing began on Oct. 9, Turkish military operations against the Syrian Democratic Forces in northern Syria, Washington’s staunchest and most effective allies in the war against the Islamic State, has killed at least 11 civilians...



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Zero Hedge

Uber & Out: Ride-Hailing Firms Lays Off Another 350 Staff

Courtesy of ZeroHedge

In the third round of layoffs since its IPO (and post-IPO share price plunge), Uber CEO Dara Khosrowshahi announced the job cuts in a company-wide email this morning.

Khosrowshahi told staff that around 350 employees across several teams within the organization, including Uber Eats, will be laid off.

All of this comes about one month after Uber laid off 435 employees across its product and engineering teams and less than three months after Uber laid off about 400 people from its marketing team. At this point, most departments at Uber have been affected by layoffs.

One wonders if, like the...



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Insider Scoop

Apple, Microsoft Battle For Position As World's Most Valuable Company By Market Cap

Courtesy of Benzinga

Apple Inc. (NASDAQ: AAPL) re-entered the $1-trillion club Oct. 4 thanks to a record run in the wake of improving fundamentals and alleviation of U.S.-China trade concerns. 

Volatile Ride Around $1 Trillion Valuation

Apple stock hit the $1 trillion market cap mark for the first time in August 2018 before iPhone woes ...



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Kimble Charting Solutions

New Gold Bull Market? Not Until This Happens!

Courtesy of Chris Kimble

After a big summer rally, Gold peaked out at $1566/oz in September.

Since then, Gold prices have been consolidating between $1475 and $1550.

So what’s happening here? Enter the Swiss Franc currency…

In today’s chart, we look at a key indicator (and correlation) for Gold. As you can see, the Swiss Franc has an uncanny resemblance to Gold.

Both Gold and the Franc are testing heavy resistance at the same time.

Until both breakout at (2), odds are low that a new Gold bull market emerges with another big rally leg higher....



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The Technical Traders

Lots of Upside Ahead for the Metals and Miners

Courtesy of Technical Traders

Palisade Radio talks with Chris as he discusses his approach to trading and why technical analysis works for him. He focuses on the chart and price action and explains why investors need to follow a trading strategy that suits their personality.

He cautions that a broad sell-off is likely when stocks move into the next bear market. This liquidation will pull everything down, including gold, for a time. Afterward, he anticipates a massive rally in the juniors.

Time Stamp References:

...



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Chart School

US Economic Review 2019Q4

Courtesy of Read the Ticker

An investor must form an opinion of the wider economic risk, here is a small sample of readtheticker.com US economy review.


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Example of the first chart in the video.


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Fundamentals are important, and so is market timing, here at readtheticker.com we believe a combination of ...

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Digital Currencies

Zuck Delays Libra Launch Date Due To Issues "Sensitive To Society"

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Facebook is taking a much more careful approach to Libra than its previous projects, CEO Mark Zuckerberg has confirmed. 

“Obviously we want to move forward at some point soon [and] not have this take many years to roll out,” he said. “But ...



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Lee's Free Thinking

Look Out Bears! Fed New QE Now Up to $165 Billion

Courtesy of Lee Adler

I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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