https://www.zerohedge.com/markets/stocks-puke-red-after-report-sec-market-structure-change
They have been captured by high finance for a decade now. This is a miracle if they ban high frequency trading
The left actually does something good for once
- 23
- 9
Top Poster of the Day:
J
Current Registered Users: 25,634
BROWSE EFFORTPOSTS
SITE GUIDE
HOLES
PING GROUPS
Live commit: 1ce4dde
Jump in the discussion.
No email address required.
Explain to my monkey brain what this means. As I just put money in ETFs and hope for the best.
Jump in the discussion.
No email address required.
Rightoids sneeding that robots are better traders than them
Jump in the discussion.
No email address required.
More options
Context
If you are a brokerage you have to actually buy and sell the equities instead of doing it pretenzees
Jump in the discussion.
No email address required.
More options
Context
More options
Context
Finance chads, is HFT that bad? I thought it was good cuz liquidity and also investment into new technology.
@Ghislaine_Maxwell 
@aqouta
Jump in the discussion.
No email address required.
Never really understood why people were so outraged about HFT. They do kind of violate the "spirit" of buying stocks because you believe in the underlying asset rather than playing the meta game but the ship kind of has sailed on that one. They tend to get paid rebates by exchanges so providing lots of liquidity. Overall I don't think Banning them will matter much. But reading the article it doesn't even sound like they're the direct target. The real leaches being cut off are the vultures that get paid fees for executing trades for clients.
Jump in the discussion.
No email address required.
Market liquidity would be fricked without HFT especially for options.
Jump in the discussion.
No email address required.
Yeah, it would be funny to watch, even if it means I would need to find a new job.
There are a simply staggering number of options contracts available to trade - over a million on any given day, not including spreads or futures - so without HFT or some other market making firm, the spreads would be absolutely insane on all but the very highest volume options.
Jump in the discussion.
No email address required.
SPX/W outrights alone there's around 800 million orders posted per day and maybe 150k of those are from non market-makers. No one would ever be able to get a fill and if they did they'd get stuck holding til expiry.
Jump in the discussion.
No email address required.
More options
Context
More options
Context
My whole career would literally be over. Frick these people.
Jump in the discussion.
No email address required.
More options
Context
More options
Context
More options
Context
My knowledge of the regulation on pfof is iffy, but I'll give it a shot.
So say best bid is $100 on the open market and Citadel is quoting a $100 bid as well. If the best bid increases to $100.05 at t=0ms, Citadel's quote to Robinhood may not need (in the regulatory sense) to update until t=1ms, despite the fact that their hardware can easily update it within 100 nanoseconds.
If a customer places a market order to sell at t=0.5ms Citadel will fill them at $100 despite best bid actually being $100.05, Citadel can then immediately sell to the open market at $100.05.
It's a form of latency arbitrage but is much less competitive. There are multiple market makers (basically just Citadel, Virtu and Jane St) trying to fill these orders and RH will (supposedly) route to the best one. But regardless your fill price won't always be as good as what's on the open market.
Now, does this matter for point and click retail?
No, because pfof has no fees and we're literally talking about differences in fill prices of <1%. No one using these brokerages should be trading on a timescale where this matters. They are clicking buttons on an app for fricks sake, who cares.
It shouldn't be banned because its really not harmful and provides an alternative to fees. Banning it will literally make no difference to retail, the morons losing money on on penny stocks and weeklies will still lose just as much money and they'll start sneeding about fees on top of it.
If someone doesn't like it switch to a different broker, there's like 50 of them.
Jump in the discussion.
No email address required.
To be clear, the executing firms actually pay for the order flow. So, using your example, Citadel would pay RobinHood for the privilege of actually executing their orders, because if they do, they get "first dibs" to trade against it (which is called internalization) before actually routing it to the market. If they do this, they need to prove that they're giving their customers the best price. But even more than that, RobinHood (well, maybe not RobinHood because they're grossly incompetent, but let's say ETrade) keeps track of metrics and expects a certain level of "price improvement" - if your firm fails to deliver enough price improvement, they might move on to use a different execution service.
In any case, they cannot give you a worse price than you'd get if they immediately routed it to an exchange.
The article doesn't give enough details but the auctions they're talking about are automated affairs. Each auction lasts like 100ms or less. It's a way to force liquidity into the market. Presumably the actual regulation is about considering auction prices, not just the BBO (best bid or offer) on lit exchanges, when determining whether or not you're giving your customer a good price.
I doubt it'll have much impact, except perhaps around some specific (but minor) strategies. Front-running client orders is already very much illegal and despite all the shit redditors talk about the markets being "rigged", the rules are enforced.
Jump in the discussion.
No email address required.
My knowledge is pretty limited to front end order execution, so I'm not sure I understand the benefit of internalization here.
If they are paying for the right to fill these orders there has to be some sort of price improvement for them as well right? Otherwise they'd get the same result just by posting a top of book quote onto the market.
Hence why I've assumed they were using some sort of latency arbitrage trickery to get around regulatory. Maybe even arbing between their low latency data feed and the higher latency feed the broker has in order to "show a price improvement" from the brokers perspective, that still isn't the current top of book.
Jump in the discussion.
No email address required.
Well if they execute the order at a price in-between the bid/ask then they save the spread. Using a price in the middle means the executing firm takes some benefit, and the customer also gets some benefit.
Let's say the market has orders to buy AAPL at $100 or sell at $105 (obviously spreads in actual products aren't even remotely this large). Customer says "I want to buy". Routed to the exchange, the customer pays $105. But with internalized flow, maybe they pay $104, which lets the executing firm immediately sell (at a lower price, but it's immediate and guaranteed, and a better price than $100 on the exchange). Plus some exchanges might charge a fee (different exchanges have different fee structures) so you could save money that way too, but those fees tend to be minor.
Many of these contracts will have explicit levels of price improvement that are required.
I don't keep too up-to-date on these but iirc you need to report timestamps to within 50 microseconds so there really isn't much time for the kind of illegal arbitrage you're suggesting.
Jump in the discussion.
No email address required.
Well in that case pfof seems even more harmless than I thought. I'm gonna go out on a limb and say the people trying to ban it aren't doing so out of the goodness of their hearts.
Jump in the discussion.
No email address required.
People just get jealous because the brokerage charges them per trade and also sells their order flow so they make money coming and going.
I will say, as someone who works in this space, most people don't have a darn clue how these things work. I wish it were as cool as wolf on wall street makes it out to be but it really isn't.
The company parties are kinda lit, but they're also pretty PC, no midget strippers firing out of cannons.
Jump in the discussion.
No email address required.
Which shop are you at? I'm a MM but only do options. I've been around the business for 13 years. I retired when I was 27, but recently got dragged back into it.
Jump in the discussion.
No email address required.
I'd rather not tell you what firm I work for on rdrama lmao
You started when you were 14?
Jump in the discussion.
No email address required.
More options
Context
More options
Context
More options
Context
More options
Context
More options
Context
More options
Context
Wow! Thanks Tempest!!
Jump in the discussion.
No email address required.
More options
Context
More options
Context
I will respectfully not mention Abercrombie earnings ππ»
Thank you & thank you
@aqouta
Jump in the discussion.
No email address required.
I lost that holding actual shares which is why I had to sneed about it, how does a clothing company lose so much money
Jump in the discussion.
No email address required.
More options
Context
More options
Context
More options
Context
HFT is bad when it front runs retail traders. By taking their market order and then making it higher or lower or take the other side of the trade. Basically ripping off retail traders everytime they buy or sell. Itβs not fair
Jump in the discussion.
No email address required.
More options
Context
More options
Context
I swear to god I'm starting to hate the word cope, it's getting up there with based and "king shit" on my list of stuff that internetstrags say way too much
The other day I made the case that just having kids doesn't mean you're contributing to society and the copestrags came out of the woodwork there too, as if it's not possible to not be a permavirgin and also question whether filling a kitty with baby batter is actually an accomplishment
I'm starting to get the sneaking suspicion that there's a lot of projection going on around here. If you can only ever hope to c*m inside someone twice in your life I guess getting them pregnant would seem like more of an accomplishment
Anyway, where am I? Oh, right, we were talking about fatties
Frick it, I'm gonna take my meds and go out for my daily run
Because I'm not fat, you see, but I am a schizo
Snapshots:
archive.org
archive.ph (click to archive)
ghostarchive.org (click to archive)
Jump in the discussion.
No email address required.
More options
Context