Posts Tagged ‘Market Structure’

SEC Said to Probe Role of Canceled Orders in May 6 Flash Crash

(Bloomberg) — The U.S. Securities and Exchange Commission is examining whether high-speed traders helped destabilize equity markets during the May 6 crash by repeatedly placing and canceling orders in an attempt to manipulate share prices, a person with direct knowledge of the inquiry said.The strategy is among several practices being investigated by regulators, said the person, who declined to be identified because the probe isn’t public.

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Human Error Said to be Source of Huge Market Selloff

(FOXBusiness)A stout-fingered trader may not have caused the 998-point drop in the stock market two weeks ago, but some type of human error appears to be the source, according to the preliminary findings of a government study into the massive market decline, FOX Business has learned.The final report, to be published by the Securities and Exchange Commission, could be made public as early as today, FOX Business has learned, and it will lay out the causes of the market plunge that has renewed calls for a more coordinated market structure, along with increased regulation of the securities markets.But according to people with knowledge of the study’s preliminary findings, there was some human error, or as one person with direct knowledge of the report told FOX Business, a “poorly handled order,” at the Chicago Mercantile Exchange, which touched off massive trading in the markets, particularly at the New York Stock Exchange.At that point, specialists on the floor of the exchange stopped making markets in various stocks that started to trade lower on other exchanges that don’t slow down trading, as the NYSE does in times of stress.According to people with knowledge of the preliminary findings, the entire market plunge lasted 17 minutes, but the last three minutes saw a massive amount of selling from retail brokers who sold stock on behalf of individual investors.It’s unclear if these points will be made in the final report when it is publicly released, or in what form they will be told.An SEC spokesman declined to comment on the matter.When the markets plunged two weeks ago, rumors circulated that a “stout fingered” trader at Citigroup (C: 3.88, 0, 0%) was responsible for the market plunge by typing in an order to sell billions instead of millions.

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Death Threats Against High-Frequency Trading Advocate Fade

Staunch proponent of high frequency trading Irene Aldridge says the e-mail death threats she received last August and September following a controversial TV interview have subsided.“That was after my first interview with Saluzzi,” she said matter-of-factly in a phone interview late Thursday. Joseph Saluzzi , co-founder of broker Themis Trading, LLC, is a harsh critique of high frequency trading, arguing it rigs the markets.The CNBC Power Lunch shouting match to which she refers took place on July 24, 2009 when she debated the merits of high frequency trading with Saluzzi.“The retail and institutional investor is currently at disadvantage to this class of investor which represents 70 per cent of the volume.

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SEC Probing High – Frequency Strategies

NEW YORK (Reuters) – The U.S. Securities and Exchange Commission will likely seek public input on so-called high-frequency trading strategies, and whether traders using them gain any special advantages by placing quick computers next to exchanges.High-frequency trading, which accounts for some 60 percent of U.S.

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Goldman Sachs defends market practices in report to SEC

In a lengthy report to the Securities and Exchange Commission, Goldman Sachs Group defended high-frequency trading, dark pools, small-selling and other market strategies. “The investing community (especially retail) has benefited from the evolving market structure and industry competition,” Goldman said in the report. Lawmakers have criticized the practices and are looking into ways to increase their transparency.more at http://www.bloomberg.com/apps/news?pid=20601103&sid=ax4InQgscKws

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