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

To: Frank A. Coluccio who wrote (44833)	9/18/2015 4:51:48 PM
From: axial	3 Recommendations Recommended By engineer Frank A. Coluccio pltodms Respond to of 46821

Hi Frank - The answer to your question lies in the fact that large funds were finally educated on how they -- and their contributing investors -- were being screwed by HFT. We're talking pension funds and Fidelity, for instance: big players. Like many on SI, these sophisticated players simply didn't understand how they were being gamed. But they were. It was RBC, Katsuyama and Thor that first brought change. In Canada, later the 'States If I interpret your question correctly the problem lies in how you understand the dynamics. IEX is being adopted by funds who don't want their trades to be gamed. When they bid $20.00/share, they don't want to discover, a nanosecond later, that the price has magically jumped to $20.01. So it's not really a "speed bump" thing—it's a "They can't game my bid" thing. That's why IEX volume continues to grow. For more detailed explanation, please see here. "But some HFTs employ “predatory” strategies to make the extra penny or two per share: things like flooding a market with orders to change a stock’s price, jumping ahead of other investors, or trading with only certain kinds of investors. These tend to work against the interests of the investors themselves, who just need their trades carried out; they may not get the best prices. As a result, IEX believes, existing exchanges and dark pools market their services towards intermediaries like brokers and HFTs, not the actual investors who drive corporate growth. “What I think is lost on people is that the investor’s order is actually far more important than the intermediary’s order,” reasons Katsuyama. “If all investors stop trading, there would be no volume. If the HFTs disappeared, there would still be trading, like there was many years ago.” So IEX takes the opposite approach. Its sales pitch is aimed at funds, which it sways with a promise to prevent predatory HFTs from hijacking their orders." HTH, Jim

To: Frank A. Coluccio who wrote (44833)	12/23/2015 3:33:35 PM
From: axial	Read Replies (1) \| Respond to of 46821

Trying to Force the S.E.C.’s Hand on High-Speed Trading 'All of which brings us back to the S.E.C. A recurring theme in the IEX application is that the quiet revolt by investors outlined in “Flash Boys” has now become a full-fledged movement for a referendum on our speed-based market structure. This framing undoubtedly puts the market regulator in an uncomfortable position, particularly because the agency only recently commenced a study of latency arbitrage. Can the S.E.C. risk approving the application — and its explicit position that latency arbitrage is “pernicious” — without a formal cost benefit analysis of the issue? Given IEX’s success in drawing investors to its dark pool, can the market regulator risk rejecting it without endorsing an exchange structure that facilitates latency arbitrage? And if the S.E.C. approves the application, does this mean it’s time to consider moving to frequent batch auctions? Whatever one makes of the merits of IEX’s application, it is difficult not to see the episode as a clear example of the growing divide between the speed with which our market microstructure evolves and the ossified process by which it is regulated. Media attention to latency arbitrage might be novel, but the issue is hardly a new one; investors have voiced concerns about exchanges’ preferential distribution of market data since at least 1975. In light of the S.E.C.’s unwillingness to take any action, IEX and its backers simply took matters into their own hands. Of course, one could view this as exactly how private ordering is supposed to work. But given the complexity of our market structure regulations, the distinction between efficient private ordering and externalizing the cost of inefficient regulations on others is hardly clear. After all, couldn’t co-location also be said to be a product of private ordering? Concerns about how the speed bump will affect trading at other exchanges make the distinction similarly blurred for IEX’s application. In light of this uncertainty, regulation by application is an ill-advised technique for regulating a market. Whatever comes of the IEX application, we hope that the experience encourages the S.E.C. to be more responsive to issues that are known to concern market participants.' [Emphasis added] Jim