If high-frequency traders are just faster than everyone else and not illegally jumping in front of others or paying off the exchanges to get preferential trading treatment, then this new area of technology-based trading is no less legitimate than the use of the telegraph, the telephone, the ticker, computers, handheld devices or older-style "black box" or "dark pool" programs that give sophisticated traders the ability to simply trade faster. If that is indeed what is happening, it qualifies as "front-running," an illegal practice on Wall Street. The programs jump in front of customer orders and gain a trading advantage. Senator Charles Schumer (D, N.Y.) is asking the SEC to ban "flash trades," which are phony orders placed by high-frequency programs that aim to fool market participants into entering orders. The proximity of high-frequency computers, which can be placed next to exchange computers for a fee, allows for an almost-osmotic transfer of information. Critics argue that individual investors are at a distinct disadvantage for this reason and a variety of others. The algorithm-based trading is allegedly an illegal form of front-running, as high-frequency traders hook into exchange computers and use "flash trades" to suss out incoming order flow and use the lightning speed of their own programs to jump ahead of customer orders. The New York Times and The Wall Street Journal are taking aim at a new form of computerized trading known as "High Frequency" trading. Even an erudite portfolio manager such as yourself may learn a thing or two.
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Then again, feel free to do a search for "Goldman Sachs" here. We are totally ecstatic that you do not lump us into the definition of that derogatory word. I'd prefer that regulators look into whether a firm like Goldman Sachs (GS) unfairly view order and information flow ahead of its customers and clients. And in all honesty I am surprised that you seem to have the correct spin on things (as per letter below from Jim Cramer's failed media experiment TheStreet). Hey Ron, didn't realize your new position as a contributing editor on CNBC came with the contributing title of "Portfolio Manager." Didn't Stevie put a one year kibbosh on that? But I digress. While it saddens me to leave blogger, it is time to move on to the next phase of the project.
Also, this website will be preserved as a backup blogsite in case of some unpredictable infrastructure failure at Readers who wish to continue following our analyses, reports, presentations and opinions are kindly invited to visit us at you will find it a very hospitable new home. Going forward, no more posts will be uploaded to blogger. We will keep blogger until such time as google/blogger decides to shut it down: it will be a repository for the roughly 2,600+ posts put on here since January 9.
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Our new website, in addition to all currently existing features, now has a full RSS feed, a Contributors section, a complete term Glossary, and a full Forum for reader initiated content, and after a one month beta testing period, is now fully functional (not to mention faster).Īnd this just the beginning - the flexible architecture of the new site has allowed us to develop some really cool, brand new features which we will be launching in a few weeks. to our new home: For a little over 6 months blogger has served us well, and yet it reached its limitations some time ago. Dear Zero Hedge readers and blogger fans, it is time to move on.
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