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Tag Archives: Flash Boys

Republicans’ Paths to Unraveling the Dodd-Frank Act; Are tougher times for Wall Street’s ‘Flash Boys’ here to stay?; Forged Warehouse Receipts Renew Concerns Over Commodities Fraud John Lothian Newsletter,Newsletter

First Read Contango Whitepaper: The Changing Face of Client Derivatives Clearing Contango has just released a special report looking at the changing face of client derivatives clearing as regulation, higher capital requirements and constraints on revenue models are changing the way banks in particular look at their clients. In line with a trend that started some years ago, the number of derivatives clearing firms is shrinking further. Banks must earn more from their clients or be faced with exiting the listed derivative brokerage business (unwelcome), accept lower returns on capital utilised (unlikely) or be more picky about the types of…

Bill Harts, Modern Markets Initiative – How a Small Group of Traders Improved Markets for All Feature,MarketsWiki Education,MWEd,Regulation,Tech / HFT

“The most liquid stocks in the world used to trade at a minimum spread of one-eighth, but was quite often trading at a quarter spread. If you were an average retail investor buying 100 shares, you would have been paying an extra $25 for that stock, just in terms of the spread costs. Today, that quarter spread is less than a penny.” The 2014 release of Michael Lewis’ book “Flash Boys” unleashed widespread criticism of the automated trading community amid Lewis’ assertion that markets are “rigged” against small investors. According to Bill Harts, CEO of the Modern Markets Initiative, nothing…

Let’s Pause a Moment: Keith Ross Talks Dark Pool Rules and IEX Interview,Regulation,Tech / HFT,Video

The addition of high speeds and multiple execution venues has altered the equity market structure in recent years. Now the SEC is weighing in with newly proposed rules on dark pools. Meanwhile, IEX, which rose to fame with Michael Lewis‘ Flash Boys, is trying to move from dark pool to full-fledged exchange. Keith Ross of PDQ Enterprises says transparency is a good thing, and a market pause has its benefits in alternate venues, but as an exchange could create chaos. When the Securities and Exchange Commission published its Regulation National Market System (Reg NMS) in 2005, only a small fraction of…

Haim Bodek, Decimus Capital Markets – A Flash Course on Market Structure Regulation,Tech / HFT,Video

“In the market there are edges that are permissible, and edges that are impermissible. It is the impermissible ones that you should care about. If it doesn’t smell right, leave.” The 2014 publication of Michael Lewis’ Flash Boys ignited a firestorm of accusations and lawsuits regarding the tactics used by certain trading firms. It has also led to a robust national debate on market structure. Haim Bodek, a former algorithmic trader who now assists the Securities and Exchange Commission in whistleblower cases, frames this debate by explaining the regulation that created the current market structure. He goes on to explain…

John Lothian Newsletter: National Stock Exchange relaunches, aims to shake up U.S. industry; ASX eyes ‘blockchain’ for risk management of market trades; OPEC Sees Demand for Its Crude Oil Falling for Rest of Decade John Lothian Newsletter,Newsletter

First Read MF Global Advocate Koutoulas At Center Of Controversy Again By Mark Melin – Value Walk Until recently, the derivatives industry was most often ignored, overlooked and dismissed as too complex or arcane to warrant attention in the mainstream. For many who worked deep in the industry, this was just fine. They didn’t seek the limelight or public acclaim. But scandals such as the $1.6 billion disappearance of funds in the MF Global case and a stunning if oddball fraud and suicide attempt at Peregrine Financial Group (PFG) put the industry and its regulators into the limelight. Now that…

John Lothian Newsletter: No Exchange for You! NYSE Channels Seinfeld in IEX Critique; CME boosts top executives’ pay; From Pits to Algos, an Old-School Trader Makes Leap to Spoofing John Lothian Newsletter,Newsletter

First Read Goldman Sachs Names 425 New Managing Directors By LIZ MOYER – NY Times Nearly a third of the Goldman Sachs Group’s 425 newly minted managing directors are millennials, or people born after 1980. Forty percent were hired as analysts. Roughly 21 percent are former summer interns. nyti.ms/1HMllke ***** The last line is very interesting, nearly 21 percent of the new managing directors named were former summer interns. Check out what interns heard this fall from CME’s Sandra Ro (below) at our World Of Opportunity event in London last month. ++++ Sandra Ro, CME Group – Financial Services Disruption:…

John Lothian Newsletter: Judge Dismisses Lawsuit Inspired by ‘Flash Boys’; Funds scramble to assess computer glitch; Margin Calls Bite Investors, Banks John Lothian Newsletter,Newsletter

First Read FIA, FIA Europe and FIA Asia Announce Merger Plans FIA The respective boards of FIA, FIA Europe and FIA Asia today announced that they have reached an agreement to formally merge the three associations in the first quarter of 2016. www.fia.org ***** And then there was one. ++++ Leverage ratio threat to the cleared derivatives ecosystem FT.com Regarding Thomas M Hoenig’s article “Weakening leverage ratio undermines banks’ accounting” (FT Trading Room, FT.com, August 12): while we respect Mr Hoenig’s views regarding the value of the Basel Committee’s leverage ratio, we believe there are flaws in its application to…

John Lothian Newsletter: Cyber criminals lead race to innovate; Block-Hunting Algorithm May Portend European Dark Pools’ Future; Fed official warns ‘flash crash’ could be repeated John Lothian Newsletter,Newsletter

First Read Bits & Pieces by John J. Lothian The Most Interesting Man in the World is now the Mayor elect of the Village of Fontana, Wisconsin. Congratulations to CQG executive Pat Kenny on winning a “highly” contested election. He was the only candidate, but lots of people dreamed of running against him. Pat Kenny does not run for office often, but when he does… We had the whole JLN team in the office yesterday for the first time since the FIA Boca Raton conference. It was nice to see everyone. It won’t last, though. We will be hitting the…

John Lothian Newsletter: As Silence Falls on Chicago Trading Pits, a Working-Class Portal Also Closes; Speed Traders Team Up in Microwave-Tower Superhighway Plan; China’s Mass Affluent to Have Double U.S. Counterparts’ Assets by 2020 John Lothian Newsletter,Newsletter

First Read High Frequency Chatter Doug Ashburn – JLN The talking heads on TV love anniversaries. They are the easiest way to fill space in the 24-hour news cycle. In the debate over high-frequency trading, however, the network brass at CNBC and Fox Business could not wait a full year before starting the “Flash Boys: One Year Later” party. Yesterday, CNBC aired a segment with Michael Lewis, author of the book that brought HFT into the mainstream vernacular. In the segment, Lewis defended his liberal use of the term “rigged” when describing the stock market, and said the markets are…