How to turn an "$14m annual subscription into annual profits of $20bn"?

[WhiskeyGirl]

Magic?  Why can't everyone have this in their home?

I've been reading for almost eight years about 'high frequency trading' HFT and dark pools.  Who pays for all this technology?

I recall that Obama spend millions, maybe billions to upgrade the internet in the US.  Where did all the money go?  Who uses all that bandwidth? 

I've been reading that they used to call what happens in this story 'frontrunning'...when your local stock broker did it...

Light travels at 186,000 miles a second in a vacuum, which is another way of saying that it covers 186 miles in a milli-second – a thousandth of a second. Given that much of our contemporary electronic communications are conveyed by pulses of light travelling along fibreoptic cables, we are given to extravagant hyperbole about the "death of distance". After all, if a message – or a file – can traverse the globe in the blink of an eye, it doesn't matter whether your hard drive is on your desktop or in a server farm in Nebraska or Sweden.

But it turns out that the speed of light is of great practical interest to some people. One group of them have shelled out $300m to lay a fibreoptic cable in a straight line from Chicago to New York. This involves, among other things, drilling through mountains and under urban areas. And for what? So that the time taken to send a signal between New York and Chicago could be reduced from 17 milliseconds to 13. For that apparently infinitesimal improvement, stock market traders were willing to pay $14m a year, plus a substantial upfront payment, to use the cable.

Therein lies the tale of Michael Lewis's enthralling new book, Flash Boys, which joins an elite but growing list of volumes that set out to explain how computing is reshaping our world. For it turns out that for people armed with the right kit, software and networking skills, an advantage of a few milliseconds is enough to let them turn a $14m annual subscription into annual profits of $20bn.

These people are called high-frequency traders – "high-frequency" because they are incredibly active (they submit almost 99% of the orders on US stock markets) and buy and sell shares in milliseconds. They are not really "traders" in any normal sense of the term, but software algorithms, and they now dominate the most important stock markets in the capitalist world.

For society, the system's complexity is dangerous, because complex systems are intrinsically unpredictable and nobody really understands this one as a whole – which means that catastrophic failure is always a remote but finite possibility.

read more here - http://www.theguardian.com/business/2014/apr/06/michael-lewis-flash-boys-high-frequency-traders

When I recall the great crash of 2008, the one McCain and Obama interrupted their campaign for...I recall some posting stories that the financial system seized up do to a power outage and trade gone bad.  What really happened?

A modern day shell game?  Lightening fast deals gone bad?

The other stories I remember, how these folks pay to put THEIR servers at the front of the nanosecond line.  Why don't all Americans have access?  Why aren't their trades documented?  If the recorded profit is $20 billion a year, what is the real profit from 99% of the trades?

[WhiskeyGirl]

“But this future will come with new tools to help investors better uncover and navigate whether they should stay in the market or pull away,” he added. “There are things in place today that, without question, could potentially disadvantage all investors.”

Those things include legal front-running, price manipulation, spoofing, phantom volumes and questionable rebate practices.

Many mutual funds hate the HFT crowd. That’s not only because of the reputed manipulations, but also because the average trade size today in the institutional market has been forced down to a pathetic 250 shares to try to keep it under the radar of HFTs that want to front-run the fund.

And that’s a problem whenever an institution like a T. Rowe Price is trying to buy or sell a block order of, say, 200,000 shares.

http://nypost.com/2014/04/06/high-speed-trading-has-to-change-hft-proponent/

[WhiskeyGirl]

Schwab on HFT: ‘Growing Cancer’ That Must Be Addressed

Charles Schwab minced few words in a statement about high-frequency trading Thursday.

“High-frequency traders are gaming the system, reaping billions in the process and undermining investor confidence in the fairness of the markets,” Mr. Schwab, founder and chairman of the discount brokerage firm that bears his name, said in the statement. “It’s a growing cancer and needs to be addressed.  If confidence erodes further, the fuel of our free-enterprise system, capital formation, is at risk. We can’t allow that to happen.”

The next day the Federal Bureau of Investigation said it is probing whether high-speed trading firms are engaging in insider trading by taking advantage of fast-moving market information unavailable to other investors.

I wonder how many in Congress and government have HFT accounts?

read more here - http://blogs.wsj.com/moneybeat/2014/04/03/schwab-on-hft-growing-cancer-that-must-be-addressed/

[WhiskeyGirl]

A dog can live a long time covered in blood sucking fleas and ticks.  Internally, they can have lots of parasites.  Some times, they go into rescue, and people restore them to good health.  These kinds of stories seem to be in the paper daily.

The fleas, ticks, and other parasites may not kill their meal ticket.  They may contribute to the decline in health, and eventual death.  Life isn't pleasant in a decline.

What does a dog and it's many parasites have to do with a political thread? 

The dog is like the American citizen.  At one time, American's enjoyed good health.  Over time, the American has become covered in fleas, ticks, and infested with internal parasites.  Everyone sucking the hard work and prosperity of everyday people on Main Street.

There are visible and direct taxes like payroll, property, sales, cell phone, and inheritance.  There are hidden taxes/parasites by regulation, taxes built into the cost of goods like medical devises (in Obamacare), taxes built into mortgage payments, user fees, and premium taxes on insurance companies.  Forced purchases (and taxes, penalties, prepaid credit cards) like Obamacare and 'welfare' charity.  Other parasites like HFT, credit/debit user fees, swipe fees, welfare, and many others that are common and invisible.  With fewer and fewer places taking cash, it's like big banks and other companies will make hidden profits on swipe fees.

They import parasites - 'Come to America, go on welfare, get a jobs, fill out faux income tax refunds, take as much as you can, just keep voting for big government' - don't worry, no ID necessary.

Two hundred years ago, one hundred years ago, American's survived without all these taxes, fees, and labor skimming tactics.  American's prospered like never before.  The American experiment worked.  People kept and enjoyed the fruit of their labor.  There were roads, bridges, schools, and charity.  Nobody got fleeced every waking moment.  Imagine a world where people lived for days, weeks, and months without constant reminders of government and private skimming.

Today?  Big government, the ruling class, big banks and businesses stay up late thinking of ways to extract/steal money from working people.  They've even borrowed trillions from future generations and complain about a 'paying for problem'.   Where is the money coming from to pay back $17 TRILLION?  Big banks?  Ruling class taxing itself?  I don't think so...

Where are the jobs?  The prosperity for Main Street?

How do working people start removing the ticks?  Ridding themselves of the fleas and other parasites? 

What's wrong with a system that allowed the fleas, ticks, and parasites to overwhelm the host? The infestation is out of control?

For millions of years, people lived without ATM/debit/credit/EBT/other plastic cards and cell phones.  Plastic cards and cell phones are the modern ear tags of enslaved people.  Can't live without them, and they do not seem to make the lives of every day people better, happier, or wealthier.  They enrich the ruling class and big business.  Who knew you couldn't survive without a piece of plastic?  A mobile entertainment devise?

just my humble opinions

[WhiskeyGirl]

Bike lanes on the highway -

Attorney General Eric Holder said the Department of Justice is committed to ensuring the integrity of the financial markets

 

In his testimony, Attorney General Holder noted the recent concerns in the financial sector regarding the practice of high-frequency trading (HFT). He said, “I can confirm that we at the Justice Department are investigating this practice to determine whether it violates insider trading laws.”

“This practice, which consists of financial brokers and trading firms using advanced computer algorithms and ultra-high speed data networks to execute trades, has rightly received scrutiny from regulators,” said Attorney General Holder.

He emphasized that the Justice Department is “committed to ensuring the integrity of our financial markets,” and the agency is determined to follow the investigation on high-frequency trading wherever the facts and the law may lead.

read more here - http://www.valuewalk.com/2014/04/doj-investigating-high-frequency-trading-hft/

Did anyone go to jail for all the credit default swaps?  Junk mortgage bundling?  2008 collapse? 

In many paces, they paint bike lanes on the highway.  Ever see a bike on there?  Would anyone even notice if high speed mini trains were allowed between those lines?  If some train company paid to have rails installed.  Would anyone notice if the mini trains ran over the lone rider thousands of times before the ambulance came to clean up the mess?

I seem to recall that stocks were a form of ownership in companies, enabling the little guys a piece of the action.  What kind of ownership do HFTs have?  I owned billions in XYZ for less than a nano second.  I did it 10 thousand times in one hour.   Wow.  The owners, the buyers and sellers hidden from public view. 

Why not let the HFTs create a special playground?  One not linked to the lives of the masses?  A private gambling den they can use that doesn't affect the masses? 

If the seller and the ultimate end buyer are among the 1%, why not let them cut out the middle man?  The 99% of trades generating billions a year?  If the 99% of trades are so great, why aren't they public? 

Why can't the 1% of trades be hidden from the 99%?

The little guy (or gal) and their piece of the pie are like the lone rider in a bike lane that has been given over to anonymous high speed transport users.  A transport system most of us will never be allowed to use, can't afford, but are forced to subsidize via taxes, lost lives, and $$$ seemingly skimmed by any means possible. 

just my humble opinions and comments.

[WhiskeyGirl]

I imagine the HFT industry is a 'closed' group.  I don't recall seeing the DOJ checking for racism, sexism, jailism, ageism, or anything else.

I don't recall seeing ads on late night TV for this kind of 'get rich quick' scheme...

I don't recall seeing open invitations in any media, or the 1% of brokers being forced to educate consumers about the HFT option...

Keeping secrets seems to be a good thing when you're hauling in BILLIONS or even TRILLIONS...

just my humble opinions

[WhiskeyGirl]

Why are the elite allowed to build a private high speed internet connection?  I wonder how much bailout money they got?  A private road for the internet. 

Why aren't the elite and ruling class forced to use the same internet as everyone else? 

I wonder if the private high speed internet connection will be under control of hostile foreign governments like the rest of the internet?  Oh, it's really a private network?

Somehow, I think they'll pretend to let others into the plan via the old school internet.  The elite will still have the fastest link, and make the most money.  No censorship for these folks.  No being blocked by the global control freaks.

Why does the elite ruling class pooh-pooh the efforts of other nations to build their own private network? 

I imagine private networks will not fall into the hands of foreign despots and fascist foreign governments and international organizations.

just my humble opinions and imagination

[WhiskeyGirl]

Other questions come to mind -

How did the 'stars' align to allow a tunnel, a cable, a network, an information pipeline be built connecting Chicago and New York and seemingly no one knows?  And, it benefits just the elite?

Isn't it possible that the cable would cause groundwater contamination?  Earthquakes?  Why didn't they use a satellite?  Where were the NIMBY folks?  The eco nuts?

I wonder at all the trollies to no where they want to build in Milwaukee, and elsewhere (California and Georgia come to mind-money pit trollies).  They want all state ratepayers to pay for Milwaukee's.  Is this just a clever 'cover' to pay for expanding the cable used by the elite?

Any change the NSA saves all the traffic on the HFT network?  Or, is it a carve out?  A forbidden, truly hidden network?

Why didn't Obama/elites signal their intent to give away the internet?  Let private citizens and groups build private networks like the HFT folks?  Maybe starting years ago?

It seems like the elites and ruling class are securing their internet future and leaving the rest of us to deal with hackers, fascist governments, censorship...

The Keystone Pipeline, a benefit to all Americans, is obstructed?

What is wrong with this picture?

[WhiskeyGirl]

The ONE Revelation about HFT Programs that Truly Scares Bankers (Hint: It's About Gold & Silver)

Last week, the big story was how bankers use HFT (High Frequency Trading) algorithmic software not only to rig markets but also to commit theft on a daily basis (Frontrunning, like Quantitative Easing, is just fancy Wall Street lingo to disguise its true meaning of theft). Though many in the public blogosphere expressed shock that stock markets are rigged and that regulators like the Securities Exchange Commission willingly allow this theft to occur, the only thing shocking about this story was how long it took this story to reach the mainstream and that people were crediting Michael Lewis with uncovering this story with his book “Flash Boys” when in reality this story had been discussed in detail on independent financial media sites for more than five years already.


For example, an accounting professor at the Yale School of Management, X. Frank Zhang, calculated that HFT trading was responsible for a minimum of 70% of all daily trading volume in US stock markets and possible as much as 78% of the volume in 2009. And HFT algorithmic trading was already dominating daily trading volume on US stock exchanges prior to 2009. Thus one can clearly see that the only thing “new” about HFT algorithms is that this old news has finally moved into mainstream media headlines.


BATS CEO William O’ Brien, when confronted on MSNBC last week with the fact that HFT algos commit millions of acts that are specifically prohibited by the US Securities and Exchange Commission’s Regulation NMS, a regulation that requires brokers to guarantee customers the best possible execution of price on orders, ludicrously argued that HFT programs have no clients (David Cummings, a computer programmer that worked at the Kansas City Board of Trade, founded BATS, a stock exchange located in Lenexa, Kansas founded. The core code of BATS was derived from tradebot, a computer program that engages in algorithmic trading). There is only one possible way that O’ Brien’s claim that HFT programs “have no clients” can be true. If the HFT programs were artificially intelligent self-aware programs that made all decisions independent of the interests of the people that coded them and the bankers that used them, then perhaps O’Brien’s claim could be partially true. Otherwise, as long as bankers hire programmers to code HFT algorithms and employ them for their benefit and to the disadvantage of their competitors as well as the disadvantage of their clients, then the obvious clients of HFT programs are bankers and the companies that entice bankers to use them. To claim otherwise is simply a flat-out lie.


In any event, the Holy Grail that the bankers are seeking to protect is not that they use HFT programs to rig stock market trading.

The real truth the bankers wish to conceal from the public is that they use HFT programs to suppress gold and silver prices.

read more here - http://news.goldseek.com/GoldSeek/1396876800.php