NYSE head: speed isn't always good NYSE head: speed isn't always good
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  1. #1

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    Default NYSE head: speed isn't always good

    "The head of the New York Stock Exchange has warned that US stock markets have become too concerned with the speed at which trades are executed, as Wall Street reels from another multi-million dollar trading loss.

    Duncan Niederauer, the chief executive of NYSE Euronext, spoke as Knight Capital battles to survive a $440m (£286m) trading loss. The company – which makes a market in thousands of shares each day and is under pressure to find a buyer – racked up the loss in a few frantic minutes of trading on Wednesday morning, when one of its computer programs sent out “a ton” of trades in error.

    The erroneous orders caused wild swings in the share prices of almost 150 companies, and forced trading in the shares of six of them to be suspended.

    Knight’s difficulties have fuelled fears that US markets have become too reliant on automated software programs that can make and execute trades at speeds far faster and in volumes far higher than a human can. The incident should be a “call to arms” for regulators, said Mr Niederauer.

    “It is important that we and the regulators are understanding speed is not always better. Nobody rational would look at this [market] and say it isn’t broken,” he said.

    The episode has revived memories of the so-called “flash crash” of 2010 in which $862bn was erased from US stock markets in less than 20 minutes. An investigation by regulators blamed a computer–based algorithm. Last month the Securities and Exchange Commission asked America’s stock exchanges to construct a single monitoring system for all share trading.

    Shares in Knight Capital soared more than 29pc today after it reportedly told customers it had secured a line of credit.

    Tom Joyce, the chairman and chief executive of Knight, whose trading floor was used as the set to film the sequel to the 1980s blockbuster Wall Street, defended the error as “an anomaly”.

    Source: NYSE head: speed isn't always good - Telegraph

    There is too much high frequency trading tulip going on - people who buy stuff should expect to either use it (ie: turn oil into petrol or turn wheat into bread or beer) or expect to hold on to it for a long time: tax system should encourage that by having very high CGT on any short term profits from trading.

  2. #2

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    Nonsense.
    High speed trading increases liquidity in markets even during periods of volatility, and on the rare occasions when it goes wrong provides ordinary traders the opportunity to make lots of money at the expense of these companies like Knight Capital, as has happened here.

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    Quote Originally Posted by KentPhilip View Post
    High speed trading increases liquidity
    It shoudl be sufficient to be able to sell shares within 24 hours of sell order placed, if somebody requiring nano-second response then they most certainly did not held shares for a long time OR panicing OR have some inside info.

    HFT is a cheat and attempt to play the system to the point of breaking it - there is no economic sense in it, this sort of hot money just create impression of high volumes of trade, totally false impression that there is money in the market.

    Anybody who isn't prepared to keep shares for 2-3 years should not be buying them in the first place.

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    Quote Originally Posted by AtW View Post
    It shoudl be sufficient to be able to sell shares within 24 hours of sell order placed, if somebody requiring nano-second response then they most certainly did not held shares for a long time OR panicing OR have some inside info.

    HFT is a cheat and attempt to play the system to the point of breaking it - there is no economic sense in it, this sort of hot money just create impression of high volumes of trade, totally false impression that there is money in the market.

    Anybody who isn't prepared to keep shares for 2-3 years should not be buying them in the first place.
    That's a bit like saying ice cream vans should be banned from the seaside because people can buy ice cream from their local supermarket when they get home later in the day. If people want to buy shares right now, who are you (or I) to stop them?

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    Quote Originally Posted by KentPhilip View Post
    If people want to buy shares right now, who are you (or I) to stop them?
    Buying quickly should be ok, but selling quickly should be discouraged, unless share were held for a long period of time, so if you buy shares then nano second is ok, but if you don't keep them for 24 hours then expect a delay in selling.

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    To think that some US trading company was/is seriously interested in neutrino detectors, so it can send messages via neutrino beams from one surface point to another along a straight line chord through the Earth and thus be able to signal about a 1/10th of a second faster than fibre optic signals crawling along cables round the surface.
    Work in the public sector? Read the IR35 FAQ here

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    Quote Originally Posted by AtW View Post
    Buying quickly should be ok, but selling quickly should be discouraged, unless share were held for a long period of time, so if you buy shares then nano second is ok, but if you don't keep them for 24 hours then expect a delay in selling.
    Huh?
    In order for someone to buy a share, he must first find a seller.
    They don't grow on trees, you know.

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    Quote Originally Posted by KentPhilip View Post
    Huh?
    In order for someone to buy a share, he must first find a seller.
    They don't grow on trees, you know.
    If nobody put a sell order then you won't be buying.

    A sell order gets 24 hour delay only after that point it can be bought.

    Problem solved, even though it will put some dirty spekulants out of business.

    It's a very heavy loss, but I think the society as a whole can take it.


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    Quote Originally Posted by AtW View Post
    If nobody put a sell order then you won't be buying.

    A sell order gets 24 hour delay only after that point it can be bought.

    Problem solved, even though it will put some dirty spekulants out of business.

    It's a very heavy loss, but I think the society as a whole can take it.

    Automated trading, it's the futures, simples

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    Quote Originally Posted by SupremeSpod View Post
    Automated trading, it's the futures, simples
    Quite.

    Now be a dear and put the kettle on!

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