High Frequency Trading, Dark Pools, Long Term Investing, & Reform

[WhiskeyGirl]

What happened last year when the investment companies lost all that money overnight?  Where did it go?  Up in smoke? 

Wasn't anyone watching he till?  Anyone looking at the mandatory reporting?  Anyone notice a losing trend?  How does that much money disappear overnight? 

Anyone ask the tough question in Congress?

If these companies were paying attention, would there have been a need for TARP?  Taxpayer debt and bondage?

Goldman Sachs Tells SEC Dark Pools, Short Sales Help Cut Costs

Oct. 27 (Bloomberg) -- Goldman Sachs Group Inc., the most profitable securities firm, defended for U.S. regulators dark pools, short-selling, high-frequency trading and other market practices that have been criticized by lawmakers.

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.

What kind of shape would Goldman Sachs be in if there was no taxpayer bailout and debt?  No pass-through money from AIG?  No new deals for GM/chrysler?

American generation debt/theft is higher than ever...

Trading on dark pools, off-exchange platforms that don’t display public quotes, has more than quadrupled to 9.4 percent of all U.S. equity volume in the past three years, according to Tabb Group LLC. High-frequency traders, whose computer programs buy and sell shares up to 1,000 times faster than the blink of an eye, account for about 46 percent of daily volume.

What kind of long term interests do traders have when they hold the stock for less than a second?  Who profits?  Long term investers?  Companies? 

http://www.bloomberg.com/apps/news?pid=20601103&sid=ax4InQgscKws

I remember, a time when holding stocks long term was considered good for the country.  Holding stocks for short periods of time was a bad thing, and profits were taxed.

Why not encourage long term investing?  Long term stockholder involvement in setting pay practices?  Voting for company leadership?

Who really owns this stock that changes ownership in seconds?  Any of these nano-second owners interested in curbing executive pay?  Any of them interested in dividends?  Or, just nano-second profits?

Why not have them report 100% of the transactions, including those involved?  Shed some light on who is making the money?  Are there any insiders involved in all this secret trading?

Why not focus the national energy on long term growth of companies?  Long term stability of prices?

Does HFT add any value to the companies being traded?  

Just nano second profits for a few?  If the trading is secret, how does the government know these folks are paying taxes on these earnings?

How can there be meaningful reform if so much remains in the dark?  No one is watching the till?

[WhiskeyGirl]

She said the practice of co-location, where some exchanges allow favored firms to locate their computers inside the exchange data center to speed up trading times, "could result in significant advantages, at least for certain traders for whom speed is of the essence."

Critics argue it's unfair that some large-volume, high-frequency traders are permitted to place their servers in an exchange's data center.

However, regulators are worried that if high-frequency traders have many of their special advantages removed, the result could be a major reduction in the volume of trades. Schapiro said the SEC would seek public comments on the issue.

Why is lower volume a bad thing?  Why isn't long term stability a goal?  Is there any value in millions of stocks that trade over and over and are owned for less than a second? 

How not measure how many people have long term hopes for a stock or company?  Long term investing?  Real money?  Not the kind of money that is created and disappeared in nano-seconds?

"Both of these undermine the integrity of the market by providing valuable pricing information to select market participants -- information that is not widely available to the public," Schapiro said.

"We will seek public comment on dark liquidity in all its forms, including dark pool alternative trading systems," she said.

Dark pools are electronic trading venues where the information on availability and pricing of stock is not made public, as it is on traditional exchanges. The dark pools make it easier for large bloc trades to be executed anonymously and make it easier to trade large blocks of stock at better prices.

Who's buying all that stock?     Why can't the buying and selling details be made public?  Let the public see where and why there is so much volume? 

Why not bring all the buying and selling into the light of day?  Scruitiny? 

How would a long term invester know that all the volume isn't due to a few big investers, buying and selling in nano-seconds to improve 'volume' and manipulate the stock price?

She said allowing non-regulated firms and so-called flash traders, who make millions of rapid trades to take advantage of tiny price fluctuations, is like "giving your car keys to a friend who doesn't have a license and letting him drive unaccompanied."

Will Main Street and long term investers win this battle?  Or, is it business as usual in Washington?

read more here - http://www.marketwatch.com/story/sec-to-study-high-frequency-trading-issue-2009-10-27


I wonder how much those up for re-election are getting in contributions from all these financial high flyers.  How much from the hidden HFT and flash traders - those that live on the dark side of profit?  The shadow of integrity?  Those that avoid the light of day?

[WhiskeyGirl]

NEW YORK, Oct 27 (Reuters) - The Securities and Exchange Commission is planning to publish a discussion paper on high-frequency trading early next year, Chairman Mary Schapiro told Reuters in an interview.

Proposals on the topic will follow in the middle of next year, she said.

The SEC is also taking seriously the issue of so-called "naked access"...

read more here - http://www.forexyard.com/en/reuters_inner.tpl?action=2009-10-27T145547Z_01_N27246564_RTRIDST_0_FINANCIAL-SEC-URGENT

The Obama administration is on top of all these things - change you can believe it.  If you really believe, you need to keep relecting the Obama administration to ensure the train is still on track.  Yes we can, and we'll talk about it next...

Gotta reinflate those market volumes, keep the bubble growing...

[WhiskeyGirl]

A 'vampire squid' of Wall Street professes his innocence

Goldman Sachs CEO Lloyd Blankfein is doing what he can to counter the perception that he and his company epitomize what's wrong with Wall Street

Lloyd Blankfein doesn't look remotely like a vampire squid.

With his round face, bald head and large, smiling eyes, the diminutive Goldman Sachs chief executive officer seems more like a friendly Hobbit.

And yet the Wall Street bank he heads can't seem to shake its unflattering characterization in Rolling Stone magazine as a "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into everything that smells like money."

Mr. Blankfein is doing what he can to counter the perception that he and his company epitomize what's wrong with Wall Street - the Byzantine financial engineering, the bailouts and now the out-sized profits and bloated bonuses.

Mr. Blankfein's message has been consistent. Goldman plays a vital role in the financial system. He and other Goldman officials like to point out that they never wanted last year's $10-billion (U.S.) government loan, which it was obliged to take and has since paid back with interest. And the big bonuses - $16-billion so far this year and counting - are just the competitive price of success.

What about all the access to cheap money backed by taxpayers?

read more here - http://www.theglobeandmail.com/report-on-business/commentary/a-vampire-squid-of-wall-street-professes-his-innocence/article1339578/

Lots of good comments.