Currency Newswire » High-Frequency Trading

Is HFT Ready to Take Over the World?

admin — Wed, 27 Oct 2010 18:16:04 +0000

High-frequency trading may be poised to take over the world.

While high-frequency traders in the United States and Europe increasingly are looking to expand into emerging markets, exchanges in places such as Brazil and India have been actively increasing their capacity in terms of lower latency and throughput. At the same time, regulators in these markets are relaxing their rules to boost electronic trading and their competitiveness in the global marketplace.

“Brazil has become the hottest market in the world in the last two years for algorithmic trading,” asserts John Bates, CTO and cofounder of Apama, Progress Software. “Even when the U.S. markets were in the depths of despair last year, Brazil was very hot. And improving latency and the electronic nature of the markets there were a big contributing factor.”

US Asks to Seal Courtroom to Guard Goldman Sachs Secrets

admin — Wed, 27 Oct 2010 18:11:37 +0000

U.S. prosecutors asked a federal judge to seal the courtroom for part of the upcoming criminal trial of a former Goldman Sachs computer programmer, an effort to protect the secrecy of the bank’s high-frequency trading platform.

* U.S. says Goldman could be harmed if details leaked

* Defense seeks to prove no intent to harm Goldman

NEW YORK – U.S. prosecutors asked a federal judge to seal the courtroom for part of the upcoming criminal trial of a former Goldman Sachs Group Inc computer programmer, an effort to protect the secrecy of the bank’s high-frequency trading platform.

Prosecutors said in a court filing that there is a “compelling interest in favor of privacy” for Goldman in the trial of the former employee, Sergey Aleynikov.

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Inside the Flash Crash Report

admin — Mon, 04 Oct 2010 20:31:06 +0000

The breathlessly awaited government report that promised to shore up public confidence by explaining why the stock market briefly plunged 998 points on May 6, with hundreds of stocks momentarily losing 60 per cent or more of their value, was released last Friday, October 1. Its neatly crafted finger-pointing to a small Kansas mutual fund firm which has been around since 1937, was immediately embraced as mystery solved by the stalwarts of the corporate press. This was done with only slightly less zeal than bestowed on the story of Saddam Hussein’s weapons of mass destruction spun out of the George W. Bush administration.

The New York Times headlined with “Single Sale Worth $4.1 Billion Led to Flash Crash.” The Washington Post went with “How One Automated Trade Led to Stock Market Flash Crash.” The Wall Street Journal led with “How a Trading Algorithm Went Awry.” Hundreds of similar headlines followed in similarly expensive media real estate. But as with the rush to war on bogus intel, the corporate press may be further damaging its credibility with the American people by ignoring the dangerous market structure that emerges in a closer reading of this report.

Secret Meeting to Plot End of High Frequency Trading

admin — Mon, 04 Oct 2010 19:47:34 +0000

The SEC’s “definitive”(ly worthless) report on what happened on May 6th was a dud, and was nothing more than a distraction-based smear campaign against Waddell and Reed (an experiment in which we can only hope W&R participated involuntarily): a firm which did something that was completely in its right to do.

But is this unexpected? After all had the SEC confirmed that it is indeed HFT who is responsible for a broken market structure, it would have effectively destroyed itself: if and when the SEC does indeed confirm that the entire market topology over the past 5 years has been hijacked by young and pustular math Ph.D.’s with fast computers, the implications to fair markets would be orders of magnitude worse than the fallout associated with the Madoff scandal, and could serve as grounds for the unwind of the SEC itself, which would have to explain why it has been avoiding calls against HFT impropriety for years.

So in a sense Mary Schapiro’s conclusion is nothing less than a lass desperate act of self preservation.

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US Lobby Group Formed For High-Frequency Traders

admin — Wed, 30 Jun 2010 21:05:26 +0000

The Futures Industry Association on Wednesday said it formed a new lobby group to represent high-frequency trading firms that have come under heightened scrutiny for trading practices that may have contributed to Wall Street’s May 6 “flash crash.”

The lobby, the Principal Traders Group (PTG), represents a who’s who of high-frequency traders, including Getco LLC and Allston Trading. It is chaired by Donald Wilson, who heads top Chicago futures trading firms DRW Trading. Most of the 24 member firms are based in Chicago.

The group’s formation is in response to “the demonization of speculation,” said FIA President John Damgard. FIA, which represents banks, exchanges and others in the futures industry, is the umbrella organization for the new lobby, but will not run it day to day.

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Circuit Breaker Stops Trades of Citigroup

admin — Wed, 30 Jun 2010 04:56:33 +0000

An experimental circuit breaker for stock markets that was put in place after last month’s so-called flash crash kicked in for the second time on Tuesday after an erroneous trade caused a sudden plunge in the price of Citigroup shares.

Trading in the shares of Citigroup, one of the most heavily traded stocks in the United States, was paused for five minutes at 1:03 p.m. after an over-the-counter trade of about 8,821 shares was posted at a price of $3.3174, or 12.7 percent lower than the $3.80 price of the previous trade.

The trade was later canceled, according to Nancy A Condon, a spokeswoman for the Financial Industry Regulatory Authority, which regulates brokerage firms. Even so, Citigroup shares closed 5 percent lower for the day, at $3.79.

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Monsters in the Market

admin — Tue, 29 Jun 2010 03:02:56 +0000

On the third floor of Citigroup’s Manhattan headquarters, at the far end of a trading floor overlooking the Hudson River, Young Kang, Citi’s global head of algorithmic products, leans over a terminal and monitors the progress of a canny and powerful beast named Dagger. Bred and trained in secret by Citi’s financial engineers, Dagger can stalk through more than 20 markets, public and otherwise—hunting for anomalies, buying and selling, prowling through mountains of historical data—all at the behest of Citi’s clients. Amid the trading-floor din, Dagger fulfills its duties in flickering silence, with a speed and acuity no human can match.

“It’s self-learning,” Kang says. “The numbers keep updating, the strategy keeps adjusting itself. It gets smarter.”

And it makes a lot of money. Algorithms like Dagger can exploit the smallest inefficiencies in the market. They can parse trades in millionths of a second. Some species can detect other algos embarking on predictable trading strategies, and ruthlessly adjust their techniques. They’re growing ever more complex, subtle, and sophisticated. And as they become more popular, they’re creating some serious headaches for regulators.

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