Wall Street Profits by Putting Investors in the Slow Lane
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Re: Wall Street Profits by Putting Investors in the Slow Lane
#2Remember when Sanders proposed a small fee on every trade on Wall Street to discourage high frequency trading and to recoup some value from the market? Remember how he was widely pronounced deranged for suggesting that there should be a fee associated with trades? How it would destroy the market?
Funny, that.
Re: Wall Street Profits by Putting Investors in the Slow Lane
#3Reading further: this really feels like PR for IEX.
Re: Wall Street Profits by Putting Investors in the Slow Lane
#4Can't practices like these not be considered in the same way as "hacking" and thus made illegal?
After all, hacking = influencing electronic systems to make them function in ways they are not intended to function. Replace "electronic" by "legal/financial" and there you are.
Re: Wall Street Profits by Putting Investors in the Slow Lane
#5Remember when Sanders proposed a small fee on every trade on Wall Street to discourage high frequency trading and to recoup some value from the market? Remember how he was widely pronounced deranged for suggesting that there should be a fee associated with trades? How it would destroy the market? Funny, that.
Common sense and basic regulations to protect people and economies have no place in this laughable economy. What you're describing, what Sanders proposed, would put a dent in the profits of some of the wealthiest, most powerful, and most soulless people in the world.
Of course it was shot down, that's one way to tell that he was cutting close to the bone.
Re: Wall Street Profits by Putting Investors in the Slow Lane
#6Someone will call this a submarine article for IEX but I don't think this is far, it was written as an oped by Dave Swensen, the famous head of Yale's endowment
fund.
Just so the issue is clear, almost all hedge funds don't do active/passive also called maker/taker, but rather they pay a flat fee per share traded to their sell side broker.
The sell side broker will then collect/pay the exchange fees. This means that the sell side broker has an incentive to post the order to a market that pays them the largest rebate rather than the market with the shorted queue.
The buy side clients are not getting worse prices necessarily as you still need to fill orders at the NBBO.
So the argument would be, why not post on the exchange with the shortest queue always. And the response would be that
1) markets move fast, and what is the shorted queue when the order is dispatched may not be the shortest queue when the order arrives.
2) Other markets may be more active, ie more orders routed to them first so the shortest queue may not be the best place to route at all.
To be fair its not a consensus that the IEX approach is better than maker taker, there is no clear consensus as to what the correct approach is even when you take out the HFT opinions.
In case anyone wants to see here's a link to the BATS cash equities execution quality page.
https://www.bats.com/us/equities/market_statistics/execution...
Re: Wall Street Profits by Putting Investors in the Slow Lane
#7Can't practices like these not be considered in the same way as "hacking" and thus made illegal? After all, hacking = influencing electronic systems to make them function in ways they are not intended to function. Replace "electronic" by "legal/financial" and there you are.
Sure, but the people standing to make millions of dollars on this particular illegal activity are also the people making the rules and laws.
Re: Wall Street Profits by Putting Investors in the Slow Lane
#8Remember when Sanders proposed a small fee on every trade on Wall Street to discourage high frequency trading and to recoup some value from the market? Remember how he was widely pronounced deranged for suggesting that there should be a fee associated with trades? How it would destroy the market? Funny, that.
Fees on trading would not meaningfully discourage high frequency trading and would just be passed on to buyers and sellers of stock in the form of larger bid/ask spreads.
Re: Wall Street Profits by Putting Investors in the Slow Lane
#9Remember when Sanders proposed a small fee on every trade on Wall Street to discourage high frequency trading and to recoup some value from the market? Remember how he was widely pronounced deranged for suggesting that there should be a fee associated with trades? How it would destroy the market? Funny, that.
Common sense and basic regulations to protect people and economies have no place in this laughable economy. What you're describing, what Sanders proposed, would put a dent in the profits of some of the wealthiest, most powerful, and most soulless people in the world. Of course it was shot down, that's one way to tell that he was cutting close to the bone.
would put a dent in the profits of some of the wealthiest, most powerful,
This is most certainly factual.
and most soulless people in the world.
This is a factually unsupportable adhominem. Sentiment that contributes to outrage on social media is a form of cultural pollution. People use it for short term gain, but it's a kind of externality which is tearing society apart. (FWIW, I dislike this situation as well.)
(Yes, this is obligatory: https://www.youtube.com/watch?v=rE3j_RHkqJc )
Re: Wall Street Profits by Putting Investors in the Slow Lane
#10Someone will call this a submarine article for IEX but I don't think this is far, it was written as an oped by Dave Swensen, the famous head of Yale's endowment fund. Just so the issue is clear, almost all hedge funds don't do active/passive also called maker/taker, but rather they pay a flat fee per share traded to their sell side broker. The sell side broker will then collect/pay the exchange fees. This means that…
Worth noting that the head of Yale's endowment fund and IEX's interests are aligned. The business model of IEX is to convince naive investors that high frequency trading is somehow screwing them and that they should choose to route their orders to IEX in order to avoid it. They then facilitate trading between these naive investors and large institutional investors (like Yale) who want to move large blocks of shares before the market moves against them.