Posts Tagged ‘Senator Ted Kaufman’

Happy High Frequency Trading Day!

Happy High Frequency Trading Day!

high frequency trading Courtesy of Joshua M Brown, The Reformed Broker 

Michael Peltz has a mammoth 13-pager on High Frequency Trading in the latest issue ofInstitutional Investor magazine.  The article is chock full of important information, including the 25 stocks most played with by high frequency traders (Sprint, Las Vegas Sands, Bank of America…). 

It also contains some killer quotes.  Here are a couple before I send you over to read the whole thing:

An exchange between the writer and financially-savvy Senator Ted Kaufman:

“We have a 300-pound gorilla in the room, and we’re saying that we’re going to keep it in a cage somewhere,” he told me. “This thing will be 600 pounds.”

“But isn’t part of the problem that there are 300 gorillas?” I asked, referring to the fact that an estimated 200 to 400 firms do high frequency trading.

“Good point,” he replied. “We have all these gorillas, and guess what? We put them in zoos where the people running the zoos don’t have enough information and authority to take care of them.”

Seth Merrin of LiquidNet, a block trading marketplace:

“The institutions are the equivalent of the British army, walking down the battlefield wearing bright red.  The high frequency traders are the Americans hiding in the woods in camouflage, picking them off. If the British army hadn’t changed its tactics, they would have lost every subsequent war.”

There are some HFT defenders in the piece, spouting the usual rhetoric about how wonderful their liquidity is (a claim that I believe was invalidated during the Flash Crash as the robots drooped their heads like marionettes with cut strings just when their liquidity was needed most), but these defenders are industry insiders for the most part.

Anyway, get acquainted with the players involved and the terminology – this debate is just beginning.

Source:

Inside The Machine (II) 

Picture credit: Jr. Deputy Accountant  


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We Need Real Financial Reform That Directly Ends Too Big To Fail

We Need Real Financial Reform That Directly Ends Too Big To Fail

By Senator Ted Kaufman (via Clusterstock)

Delaware Senator Ted Kaufman

(In a speech on the Senate floor this morning, Ted Kaufman (D-Del.) blasted current financial reform proposals. He called for reform that sets strict limits on the size of banks and doesn’t depend on regulatory discretion.)  

Introduction:  Where the Burden of Proof Lies

Financial regulatory reform is perhaps the most important legislation that the Congress will address for many years to come. Because if we don’t get it right, the consequences of another financial meltdown could truly be devastating.

In the Senate, as we continue to move closer to consideration of a landmark bill, however, we are still far short of addressing some of the fundamental problems – particularly that of “too big to fail” – that caused the last crisis and already have planted the seeds for the next one.  And this is happening after months of careful deliberation and negotiations, and just a year and a half after the virtual meltdown of our entire financial system. 

Following the Great Depression, the Congress built a legal and regulatory edifice that endured for decades.  One of the cornerstones of that edifice was the Glass-Steagall Act, which established a firewall between commercial and investment banking activities.  Another was a federally guaranteed insurance fund to back up bank deposits.   Other rules were imposed on investors to tamp down rampant speculation, like margin requirements and the uptick rule on short selling.

That edifice worked well to ensure financial stability for decades.  But in the past thirty years, the financial industry, like so many others, went through a process of deregulation.  Bit by bit, many of the protections and standards put in place by the…
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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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Phil's Favorites

Ray Dalio Is Kinda, Sorta, Really Wrong, Part 3

 

Ray Dalio Is Kinda, Sorta, Really Wrong, Part 3

Courtesy of John Mauldin, Thoughts from the Frontline 

Two weeks ago I started a mini-series in the form of an open letter responding to a series of essays by Ray Dalio, the founder of Bridgewater Associates. I wrote here and here that he was kinda, sorta wrong in Why and How Capitali...



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Zero Hedge

Exposing The Fed's False QE/QT Narrative With Its Own Data

Courtesy of ZeroHedge. View original post here.

Authored by Daniel Nevins via FFWiley.com,

“The fact that financial markets responded in very similar ways... lends credence to the view that these actions had the expected effects on markets and are thereby providing significant s...



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ValueWalk

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

 

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

Courtesy of Vikas Shukla, ValueWalk

Pexels / Pixabay

The trend of vegan food has been gathering momentum in the last few years as people become more health conscious. They have also begun to realize the environmental impact of raising meat for human consumption. According to PETA, it takes an estimated 1...



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Insider Scoop

Wedbush Steps To The Shopify Sidelines

Courtesy of Benzinga.

Shopify Inc (NYSE: SHOP) ha introduced multiple new initiatives to spur growth, but the stock's valuation is already full at current levels, according to Wedbush.

The Analyst

Wedbush's Ygal Arounian downgraded Shopify from Outperform to Neutral with a 12-month price target lifted from $270 to $305.

The Thesis

Shopif...



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Kimble Charting Solutions

Wilshire 5000 Creating A Triple Top? An Important Breakout Test Is In Play!

Courtesy of Chris Kimble.

The stock market has been on fire of late, rallying up to the edge of price resistance on several indexes. Today, we look at one of those stock market indexes: the Wilshire 5000.

The Wilshire 5000 tracks all of the stocks in the US market, so it is a broad-based index that carries significant importance when gauging the health of the overall US stock market.

Looking at the long-term “weekly” chart above, it is pretty clear that the index is at an important price juncture.

The Wilshire 5000 spent the last 25 years trading within a rising price channel (1)...



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Chart School

Formula for when the Great Stock Market Rally ends

Courtesy of Read the Ticker.

When valuations for the boring water company or the boring electric company is trading like your Facebook, Apple, Amazon or Netflix or Google (ie FANG) you know something is wrong.

This is when a seriously over valued market is screaming at you.

Of course the reader must understand in a world where money printing goes super nuts (Zimbabwe style) the stock market may go hyper inflationary and picking a time frame for a top is never a good idea, but we are not there yet. There is no Ben Bernanke helicopter money to the masses yet (ie MMT). 

To see when water company's (and such like) are nearing the crazy FANG like valuations a review of the Dow Jones Utility Index channel shows us how history can repeat. The c...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

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

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



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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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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

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

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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About Phil:

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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