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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: Win-Lose-Draw who wrote (34744)	10/15/2012 10:31:19 AM
From: axial	Read Replies (1) \| Respond to of 46821

"It will be interesting to look back on this 2 years from now and see how the situation has evolved." High-Speed Trading No Longer Hurtling Forward 'The challenges facing speed-focused firms are many, the biggest being the drop in trading volume on stock markets around the world in each of the last four years. This has made it harder to make profits for traders who quickly buy and sell shares offered by slower investors. In addition, traditional investors like mutual funds have adopted the high-speed industry’s automated strategies and moved some of their business away from the exchanges that are popular with high-speed traders. Meanwhile, the technological costs of shaving further milliseconds off trade times has become a bigger drain on many companies.' nytimes.com I couldn't find Frank's post noting that the economics of HFT should be self-defeating. That appears to be what's happening. Also interesting is the appearance of firms practicing what might be called "counter-HFT" trading. HFT isn't disappearing, it's consolidating. Capital counts. Flash crashes continue: nanex.net --- Theoretically faster trade execution shouldn't be a problem. Two main factors are worrying: [1] The practices linked with it - quote stuffing, information asymmetry, etc. [2] Potential systemic risk - an unknown with a history in automated trading. Mystery Nasdaq algorithm accounted for 10% of bandwidth last week 'Although the exact motive behind the algorithm is still unclear, it has been suggested that a trader could have been testing the water to see how he or she could use the additional bandwidth to create a latency advantage. By using up additional bandwidth, the program could potentially slow down others trying to execute trades, allowing it to buy and sell on information that its competitors wouldn't receive until fractions of a second later. [...] Hunsader told CNBC that regulators should do something fast to better control such situations, as this type of algorithm could have had a negative impact on the stock markets if big news had broken during the week.' news.idg.no Jim

To: Win-Lose-Draw who wrote (34744)	2/22/2013 3:15:11 PM
From: axial	1 Recommendation Read Replies (2) \| Respond to of 46821

A Tax That May Change the Trading Game ' To the dismay of the United States government — not to mention Wall Street — much of Europe seems poised to begin taxing financial trading as soon as next year. [...] If Europe proves to be correct, it could turn out to be a seminal moment in the relation of governments to large financial institutions. The tax would be tiny for investors who buy and hold, but could prove to be significant for traders who place millions of orders a day. [...] I’ll get to how Europe thinks it can prevent widespread evasion in a minute. But for now, assume the Europeans could accomplish that. And assume, as European officials say they hope will happen, that the tax spreads to other major markets, something Europe is trying to encourage by offering to share the tax revenue with other countries that impose a similar tax. What would happen? It would not destroy markets that have good reason to exist — that is, markets that serve actual investors. The tax would be far smaller than the fixed commissions that American investors once took for granted, and even less than the costs implicit in the fact that until decimalization arrived in 2001, that most stocks could move only in increments of one-eighth of a dollar, or 12.5 cents. Markets, and the American economy, managed to prosper. But there would nevertheless be significant changes — changes that might be for the better in some ways. High-frequency trading, which was encouraged by allowing prices to move in increments of a penny or less, and by technological advances, would be discouraged. So too would be some of the strategies used by hedge funds that involve trades expected to yield very narrow — but presumably very safe — profits. To make such trades worth doing, funds borrow a lot of money and make the trades using very little equity. That is a strategy that is guaranteed to work — or to blow up disastrously if markets do not act as expected. Discouraging it might be a good thing. One objective, says Algirdas Semeta, the European Union commissioner in charge of tax policy, “is to reorient the financial system back to financing the real economy.” ' nytimes.com Jim