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Wall Street Profits by Putting Investors in the Slow Lane

nytimes.com

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Re: Wall Street Profits by Putting Investors in the Slow Lane

#31

Post by dsacco »

netcan wrote: post #18
harryh wrote: post #8

Earlier quoted context omitted.

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.

I think higher spreads would “slow” highest frequency trading. They cross the spread many more times per dollar than regular investors to it costs them more. High frequency trading only works inasmuch as transaction costs are low, at least that’s my understanding.

> I think higher spreads would “slow” highest frequency trading. They cross the spread many more times per dollar than regular investors to it costs them more.

If I understand your thesis correctly, you want to decrease liquidity in order to reduce the speed at which high frequency trading can be executed?

I'm not following your point about transaction costs - or do you mean that you'd limit HFT by reducing liquidity, which in turn would reduce their volume, reducing their trade discounts?

Re: Wall Street Profits by Putting Investors in the Slow Lane

#32

Post by Pxtl »

dsacco wrote: post #25
Pxtl wrote: post #2

Remember 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.

Your comment, while snarky, isn't a refutable statement. As it stands you seem to be endorsing some position, which I'm inferring is in favor of Sanders and maybe in opposition to HFT. I can't really tell what you're getting at precisely though. > Remember how he was widely pronounced deranged for suggesting that there should be a fee associated with trades? How it would destroy the market? Who said this, specificall…

It's mostly about how skimming a tiny bit of cash off of every trade is perfectly good for the exchanges to do to john Q public, but heaven help us if real traders have to put up with that.

I have no idea if Sanders' plan was good or not, I'm more grousing about how critically important principles of how the market is supposed to work seem to vary depending on whether you're talking about consumer-level investments vs. institutional investors.

Re: Wall Street Profits by Putting Investors in the Slow Lane

#33

Post by corporateslave3 »

Pxtl wrote: post #2

Remember 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.

You are aware that HFT is essentially dead? It isnt profitable anymore and most of those firms are failing. Trading situations that allow for easy outsized profits like that disappear very fast.

Re: Wall Street Profits by Putting Investors in the Slow Lane

#34

Post by jorjordandan »

stcredzero wrote: post #9
QAPereo wrote: post #5

Earlier quoted context omitted.

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.) (Ye…

Outrage is a form of cultural pollution? So no one should ever be outraged by peoples actions? Or only in the right circumstances? Who gets to say when its justified, if ever?

Re: Wall Street Profits by Putting Investors in the Slow Lane

#35

Post by [deleted] »

osrec wrote: post #13

I think this is well known. The real problem is that the traders are much smarter than the regulators, and their ability to obscure far exceeds the regulators' ability to untangle. Incentivise your regulators better and you might end up attracting some real talent who can unearth the tricks the crafty traders pull every day (I am an ex trader, from a bulge bracket IB, and trust me, what some of these guys do is not a…

[deleted]

Re: Wall Street Profits by Putting Investors in the Slow Lane

#36

Post by harryh »

bko wrote: post #22

Every article I read on the topic has a plug for IEX, an exchange that "refuses to pay kickbacks" which make me think that these peices are basically advertisements. Either kick backs serve no purpose and IEX will thrive especially in this environment where where investors are clamoring for yield. Or it does have some purpose or is not significant. Putting in regulations would likely lead to more complexity and regul…

Kickbacks to brokers that are sending out retail flow allow those brokers to reduce commissions on trading. These reductions have gone all the way to zero in a lot of places.

Re: Wall Street Profits by Putting Investors in the Slow Lane

#37

Post by kesselvon »

dsacco wrote: post #27
dm3 wrote: post #12

Earlier quoted context omitted.

Something like a minimum holding time is a more reasonable approach. However, there's not a clear cut answer in any case.

> Something like a minimum holding time is a more reasonable approach. However, there's not a clear cut answer in any case. Why do you want to reduce high frequency trading?

flash market crashes.

Re: Wall Street Profits by Putting Investors in the Slow Lane

#38

Post by sseveran »

javajosh wrote: post #17
Pxtl wrote: post #2

Remember 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.

I've always thought a better solution would be a voluntary market "quantization" at some reasonable human-scale time frame. It would be a little random (to avoid gaming), so all put and asks get resolved "about every hour". There would probably have to be a law to prevent people from running markets at faster time-scales on top of this.

This has existed in various forms for more than 10 years. Nasdaq I believe has 3 or 4 discrete intraday crosses in addition to the opening and closing cross. You don't want it to be random since participants need certainty about when the cross will occur. In addition there are a variety of venues that allow block trading in various forms that market participants can use.

Re: Wall Street Profits by Putting Investors in the Slow Lane

#39

Post by hectorr »

harryh wrote: post #23

The problem with this essay is that it conflates the needs of a large institutional investors like Yale with the needs of small investors (like you and me). In many cases these needs can be inverted. Yale wants to buy and sell large blocks of stock without the price moving away from them. I want to buy and sell stock at the best possible price with all of the latest information transmitted to the market as fast as po…

Yes. This isn't Wall Street is bilking the common man. This is one side of Wall Street trying to squeeze the other side, and appealing to the public to help their case. It's a tough market for big money right now. Opportunities are scarce and their customers are pushing down costs, so they're putting pressure on their suppliers.

Re: Wall Street Profits by Putting Investors in the Slow Lane

#40

Post by lin_lin »

corporateslave3 wrote: post #33
Pxtl wrote: post #2

Remember 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.

You are aware that HFT is essentially dead? It isnt profitable anymore and most of those firms are failing. Trading situations that allow for easy outsized profits like that disappear very fast.

Is this true? Any links? Not doubting you, just interested.
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