Monday, November 26, 2012

High Frequency Trading War Escalates with Microwaves: Insider Calls it "Cheating"


Microwave Heats UP Market Speed. by Jacob Bunge Nov 23, 2012 p. C1.

[Excerpted] In a business where milliseconds matter, three of the largest exchange operators are looking to join the race to beam data to traders via ultrafast microwave links.

CME Group Inc. and Nasdaq OMX Group are exploring a joint venture that would relay price and other market information between New York and Chicago faster than existing underground fiber-optic cables, while NYSE Euronext is offering services to capitalize on demand for speedier links between London and Frankfurt. 

....ARound the world 'there's a bit of an arms race between various vendors to secure ther ight frequencies and roof space,'.... 

The embrace of microwave radio technology comes as the role of speed and access to data in the markets is under increased scrutiny. The SEC in Sep fined NYSE Euronet $5 million for providng prices to some customers ahead of the broader market....[end excerpt]

Majia here: The arms race of high frequency trading allows proprietary traders to scalp other parties' transactions. This practice is not "market making" as the banksters would have you believe. Rather, it is essentially CHEATING:

Ex-Insider Calls High-Frequency Trading ‘Cheating’ Thursday, 20 Sep 2012 http://www.cnbc.com/id/49103708/?Ex_Insider_Calls_High_Frequency_Trading_Cheating?__source=yahoo|instory|&par=yahoo


High-frequency trading — [Excerpted] particularly the practice of “queue-jumping” —amounts to little more than cheating, former Wall Street insider Haim Bodek said Thursday in a CNBC exclusive television interview. 

“I felt, I’m playing poker with a bunch of guys, and six months after I’m losing over and over and over, they say, ‘We’re cheating. Didn’t you know? Everyone knew.’ And my problem was after that, I thought that somehow, with my firm, that because I knew how these practices work, I could somehow trade around them. And I came to the conclusion that it is actually an unbeatable system right now,” he said on “Fast Money.”

“I don’t think anybody can compete that’s outside of this particular practice, and that’s why it’s 50 to 70 percent of U.S. market because the diversity of our algorhithmic trading tradition have been annihilated by this particular practice,” he added.... [end excerpt]

see also http://www.cnbc.com/id/49102808/ 


PREVIOUS POSTS ON HIGH FREQUENCY TRADING

Oct 23, 2012
Majia here: High frequency trading allows companies to engage in a variety of fraudulent activities -- including quote stuff and naked short selling -- thereby allowing companies to 'scalp' other traders' legitimate trades.
Apr 09, 2012
Majia here: High frequency trading allows companies to engage in a variety of fraudulent activities -- including quote stuff and naked short selling -- thereby allowing companies to 'scalp' other traders' legitimate trades.
Aug 28, 2011
High frequency trading (HFT) technology enables profits to be gleaned from “movement” itself within markets by skimming the purchasing and selling activities of other traders, especially large institutional investors such as ...
Sep 15, 2012
Financial Warfare Using High Frequency Trading, Quote Stuffing and Naked Short Selling http://majiasblog.blogspot.com/2011/08/financial-warfare-using-high-frequency.html ...
Oct 24, 2009
In today's WSJ, Jason Zweig writes that "More than two-thirds of stock-market volume comes from high-frequency traders, who can buy or sell in less thant 400 microseconds, or nearly a thousand times faster than you can ...
Apr 12, 2012
This is a hidden and hefty tax that shifts vast wealth from the many to a few speculators. Today's speculators use a variety of techniques enabled by high frequency trading that allows "scalping" and outright fraud (e.g. naked ...
Aug 11, 2012
HOWEVER, a former Goldman Sachs computer programmer, Sergey Aleynikov, who allegedly absconded with code for high frequency trading he had written, is now being charged AGAIN with two felonies by the Manhattan ...
 

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