M6 - Man, Mind, Money, Markets, Method & Madness
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In the posted link is a short video about HFT. iEX is the company who is doing business against those HFT companies. iEX balances the disadvantage for high volume investors against the advantage from the HFT companies over those investors.
http://www.iextrading.com/about/
http://www.iextrading.com/about/
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Speed Traders Play Defense Against Michael Lewis’s Flash Boys
http://www.businessweek.com/article...y-defense-to-michael-lewiss-flash-boys#r=most popular
In Sunday night’s 60 Minutes interview about his new book on high-frequency trading—Flash Boys—author Michael Lewis got right to the point. After a brief lead-in reminding us that despite the strongest bull market in years, American stock ownership is at a record low, reporter Steve Kroft asked Lewis for the headline: “Stock market’s rigged,” Lewis said nonchalantly. By whom? “A combination of stock exchanges, big Wall Street banks, and high-frequency traders.” Flash Boys was published today. Digital versions went live at midnight, so presumably thousands of speed traders and industry players spent the night plowing through it. Although the book was announced last year, it’s been shrouded in secrecy. Its publisher, W. W. Norton, posted some excerpts briefly online before taking them down.
Despite a lack of concrete details, word started getting around a few months ago that Lewis had spent a lot of time with some of the HFT industry’s most vehement critics, such as Joe Saluzzi at Themis Trading. The 60 Minutes interview only confirmed what many people had suspected for months: Flash Boys is an unequivocal attack on computerized speed trading. In the interview, Lewis adhered to the usual assaults: High-frequency traders have an unfair advantage; they manipulate markets; they get in front of bigger, slower investors and drive up the prices they pay to buy a stock. They are, in Lewis’s view, the consummate middlemen extracting unnecessary rents from a class of everyday investors who have never been at a bigger disadvantage. This has essentially been the nut of the HFT debate over the past five years.
Peter Nabicht, a former executive at Allston Trading, a large HFT firm, is now a senior adviser to MMI. He says Lewis drastically simplified the narrative of HFT, focusing his full attention on how it’s hurt the market rather than how it’s helped. To paint speed traders as a band of insiders misses the whole point, says Nabicht, who insists they’ve actually helped kill the “insiders clubs” of specialists and brokers “where only a small group of people have access to the market.” In conversations with a number of HFT firms and industry players, Nabicht says he has yet to find one that Lewis reached out to.
http://www.businessweek.com/article...y-defense-to-michael-lewiss-flash-boys#r=most popular
In Sunday night’s 60 Minutes interview about his new book on high-frequency trading—Flash Boys—author Michael Lewis got right to the point. After a brief lead-in reminding us that despite the strongest bull market in years, American stock ownership is at a record low, reporter Steve Kroft asked Lewis for the headline: “Stock market’s rigged,” Lewis said nonchalantly. By whom? “A combination of stock exchanges, big Wall Street banks, and high-frequency traders.” Flash Boys was published today. Digital versions went live at midnight, so presumably thousands of speed traders and industry players spent the night plowing through it. Although the book was announced last year, it’s been shrouded in secrecy. Its publisher, W. W. Norton, posted some excerpts briefly online before taking them down.
Despite a lack of concrete details, word started getting around a few months ago that Lewis had spent a lot of time with some of the HFT industry’s most vehement critics, such as Joe Saluzzi at Themis Trading. The 60 Minutes interview only confirmed what many people had suspected for months: Flash Boys is an unequivocal attack on computerized speed trading. In the interview, Lewis adhered to the usual assaults: High-frequency traders have an unfair advantage; they manipulate markets; they get in front of bigger, slower investors and drive up the prices they pay to buy a stock. They are, in Lewis’s view, the consummate middlemen extracting unnecessary rents from a class of everyday investors who have never been at a bigger disadvantage. This has essentially been the nut of the HFT debate over the past five years.
Peter Nabicht, a former executive at Allston Trading, a large HFT firm, is now a senior adviser to MMI. He says Lewis drastically simplified the narrative of HFT, focusing his full attention on how it’s hurt the market rather than how it’s helped. To paint speed traders as a band of insiders misses the whole point, says Nabicht, who insists they’ve actually helped kill the “insiders clubs” of specialists and brokers “where only a small group of people have access to the market.” In conversations with a number of HFT firms and industry players, Nabicht says he has yet to find one that Lewis reached out to.
This is absolutely right.The long term investors have been driven away from the markets.
The same is the case in India too.HFT's and Algo trading are slowly but surely bleeding and killing retail investors and traders.
The mutual fund industry has taken a large hit.Small term investors who want to invest in the markets but have little knowledge are suffering from losses even in index funds.
Intraday traders who used take a position and square it off at the end of the day have been turned into scalpers.Option buyers and option writers have been at the receiving end too.
IEX Welcomes High-Speed Traders, as Long as They Behave
http://www.bloomberg.com/news/2014-03-31/iex-welcomes-high-speed-traders-as-long-as-they-behave.html
IEX Group Inc.’s trading platform was built to combat predatory practices. That doesn’t mean it’s on a crusade to kill high-frequency trading firms. Chief Executive Officer Brad Katsuyama, whose firm is the subject of Michael Lewis’s new book “Flash Boys,” welcomes all kinds of traders on his five-month-old platform that’s trying to reshape the $22 trillion U.S. equity market. Virtu Financial Inc., one of the biggest high-speed trading firms, trades on IEX, for instance.
“It’s not about being anti-HFT, but about being pro-fairness,” Katsuyama said during an interview today. “It would be easy for us to go after Virtu or an HFT firm because of the way we’re being shaded. But it’s not fair because although they are only a small percentage of our overall volume, they are a good contributor of value to our market.”
IEX aims to level the playing field for investors by curbing the pace of buying and selling -- eliminating opportunities for the fastest firms to trade in front of slower ones. To avoid conflicts of interest, IEX doesn’t let brokers or traders such as Virtu own stakes. Only money managers such as Brandes Investment Partners, David Einhorn’s Greenlight Capital Inc. and Bill Ackman’s Pershing Square Capital Management LP are owners.
“There are HFT strategies that are beneficial to the market and create true liquidity,” said Joe Scafidi, the director of trading at money-management firm Brandes Investment Partners, which oversees $27 billion and owns an IEX stake. IEX is “not anti-HFT. It’s pro-efficient market.”
Lewis told CBS Corp.’s “60 Minutes,” during an interview broadcast yesterday, that the U.S. equity market is rigged because the fastest traders are able to determine which stocks investors plan to buy, purchase them first and then sell them back at a higher price. He’s adding his voice to an increasingly loud debate about high-frequency strategies. Earlier this month New York Attorney General Eric Schneiderman said he’s scrutinizing practices that give some computerized firms a speed edge, while regulators in Washington have also said the issue should be examined.
High-frequency trading comprises a diverse set of software-driven strategies that have spread from U.S. equity markets to most developed countries as computer power grew and regulators tried to break the grip of centralized exchanges. They usually employ super-fast computers to post and cancel orders at rates measured in thousandths or even millionths of a second to capture price discrepancies on more than 50 public and private venues that make up the American equities market.
Firms using the tactics account for about half of share volume in the U.S., a statistic that shows their pervasiveness and hints at the obstacles faced by proposals to rein them in. Exchanges rely on HFTs for profits as well as liquidity, with electronic market makers all but eliminating the old system of human floor traders who oversaw the buying and selling of equities. While critics such as Lewis see a Wall Street plot, proponents say the new system is faster and cheaper. “We act on the assumption that computerized trading never goes away,” Katsuyama said. “It should be part of the market and it should be delivering the efficiencies that they deliver,” he added. “But should it be 50 percent of the market or greater? Probably not. It is an intermediary after all.”
“We went along and said that while some of the press might give off the perception we’re anti-HFT, we’re not, we’re pro-technology,” he said. “I’d say the meetings went fairly well. At the beginning they weren’t that receptive, they were a little bit skeptical about our speed bump, that’s all they knew it to be. But when they went through our architecture, a lot of them said, ‘You’ve thought this through, I like the architecture.’”
Several of these firms asked for a backdoor into IEX -- a way to circumvent IEX’s design to their own benefit. “They weren’t joking,” said Ryan, who declined to name the firms or say what they asked for. “They literally felt it was a legitimate question because for years they’ve been granted that type of special treatment.”
http://www.bloomberg.com/news/2014-03-31/iex-welcomes-high-speed-traders-as-long-as-they-behave.html
IEX Group Inc.’s trading platform was built to combat predatory practices. That doesn’t mean it’s on a crusade to kill high-frequency trading firms. Chief Executive Officer Brad Katsuyama, whose firm is the subject of Michael Lewis’s new book “Flash Boys,” welcomes all kinds of traders on his five-month-old platform that’s trying to reshape the $22 trillion U.S. equity market. Virtu Financial Inc., one of the biggest high-speed trading firms, trades on IEX, for instance.
“It’s not about being anti-HFT, but about being pro-fairness,” Katsuyama said during an interview today. “It would be easy for us to go after Virtu or an HFT firm because of the way we’re being shaded. But it’s not fair because although they are only a small percentage of our overall volume, they are a good contributor of value to our market.”
IEX aims to level the playing field for investors by curbing the pace of buying and selling -- eliminating opportunities for the fastest firms to trade in front of slower ones. To avoid conflicts of interest, IEX doesn’t let brokers or traders such as Virtu own stakes. Only money managers such as Brandes Investment Partners, David Einhorn’s Greenlight Capital Inc. and Bill Ackman’s Pershing Square Capital Management LP are owners.
“There are HFT strategies that are beneficial to the market and create true liquidity,” said Joe Scafidi, the director of trading at money-management firm Brandes Investment Partners, which oversees $27 billion and owns an IEX stake. IEX is “not anti-HFT. It’s pro-efficient market.”
Lewis told CBS Corp.’s “60 Minutes,” during an interview broadcast yesterday, that the U.S. equity market is rigged because the fastest traders are able to determine which stocks investors plan to buy, purchase them first and then sell them back at a higher price. He’s adding his voice to an increasingly loud debate about high-frequency strategies. Earlier this month New York Attorney General Eric Schneiderman said he’s scrutinizing practices that give some computerized firms a speed edge, while regulators in Washington have also said the issue should be examined.
High-frequency trading comprises a diverse set of software-driven strategies that have spread from U.S. equity markets to most developed countries as computer power grew and regulators tried to break the grip of centralized exchanges. They usually employ super-fast computers to post and cancel orders at rates measured in thousandths or even millionths of a second to capture price discrepancies on more than 50 public and private venues that make up the American equities market.
Firms using the tactics account for about half of share volume in the U.S., a statistic that shows their pervasiveness and hints at the obstacles faced by proposals to rein them in. Exchanges rely on HFTs for profits as well as liquidity, with electronic market makers all but eliminating the old system of human floor traders who oversaw the buying and selling of equities. While critics such as Lewis see a Wall Street plot, proponents say the new system is faster and cheaper. “We act on the assumption that computerized trading never goes away,” Katsuyama said. “It should be part of the market and it should be delivering the efficiencies that they deliver,” he added. “But should it be 50 percent of the market or greater? Probably not. It is an intermediary after all.”
“We went along and said that while some of the press might give off the perception we’re anti-HFT, we’re not, we’re pro-technology,” he said. “I’d say the meetings went fairly well. At the beginning they weren’t that receptive, they were a little bit skeptical about our speed bump, that’s all they knew it to be. But when they went through our architecture, a lot of them said, ‘You’ve thought this through, I like the architecture.’”
Several of these firms asked for a backdoor into IEX -- a way to circumvent IEX’s design to their own benefit. “They weren’t joking,” said Ryan, who declined to name the firms or say what they asked for. “They literally felt it was a legitimate question because for years they’ve been granted that type of special treatment.”
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