Wash Trading - Computers on Wall Street are Buying and Selling to Themselves!


Computers on Wall Street are Buying and Selling to Themselves!


As if we needed another story to further solidify the running joke that has become the U.S. stock market.  In this article from Bloomberg we find out that:

High-frequency trading firms are drawing scrutiny from U.S. regulators seeking evidence that they may be distorting market prices by conducting transactions with themselves, said two people with knowledge of the matter.

But fear not America, the SEC is on the case!

The Securities and Exchange Commission and Commodity Futures Trading Commission have sharpened their focus on high- frequency and algorithmic trading since May 6, 2010, when about $862 billion was erased from stock values in 20 minutes before share prices recovered from the plunge.

Wow, that makes me feel a lot better.  Two years “sharpening their focus.”

Oh well, perhaps the CFTC will do something?

The CFTC has been considering issuing a so-called concept release, a step prior to a formal rulemaking, which could lead to new testing, supervision and oversight requirements for high- frequency and automated trading.

They are “considering a concept release!”  Must be busy working on the Jon Corzine case right?  Which beach is he laying out on this week?

Full article here.

---

Wash Trading by High-Frequency Firms Said to Face U.S. Scrutiny

 

High-frequency trading firms are drawing scrutiny from U.S. regulators seeking evidence that they may be distorting market prices by conducting transactions with themselves, said two people with knowledge of the matter.

So-called wash trades, in which a party buys a contract from itself, could be executed inadvertently by firms with multiple algorithms active in the same stock or derivative, said the people, who requested anonymity because the review isn’t public. Such trades, which can alter the price of shares if they are executed above or below market rates, would be illegal if deemed intentional efforts to manipulate stocks.

The Securities and Exchange Commission and Commodity Futures Trading Commission have sharpened their focus on high- frequency and algorithmic trading since May 6, 2010, when about $862 billion was erased from stock values in 20 minutes before share prices recovered from the plunge. Regulators have expressed concern that some firms and electronic exchanges don’t have sufficient controls to prevent a range of events -- from improper trades to programming glitches -- that could roil markets even when there is no wrongdoing.

High-frequency trading, in which computer algorithms are used to buy and sell stocks in fractions of a second, accounts for more than half of equity trading volume. Getco LLC and Citadel LLC, both based in Chicago, and New York-based Virtu Financial LLC are among the biggest automated-trading firms.

Exchange operators including Nasdaq OMX Group Inc. (NDAQ) and NYSE Euronext (NYX) have started services to help firms avoid accidental wash trades.

‘Undesirable Executions’

Bats Global Markets Inc. updated a service on its two exchanges last month to help users avoid “undesirable executions against themselves,” the Lenexa, Kansas-based exchange operator told the SEC. Direct Edge Holdings LLC began a similar service on two exchanges in 2010 to prevent “the potential for (or the appearance of) ‘wash sales’ that may occur as a result of the velocity of trading in today’s high-speed marketplace,” according to a filing with the SEC.

“Regulators cannot assume that algorithms in the markets are always well-designed, tested and supervised,” CFTC Chairman Gary Gensler said at a June 20 meeting of the agency’s technical advisory committee. “To give hedgers and investors the confidence in markets that they really need and deserve, I think regulators always need to adapt.”

Broad Definition

The CFTC has been considering issuing a so-called concept release, a step prior to a formal rulemaking, which could lead to new testing, supervision and oversight requirements for high- frequency and automated trading. At a meeting of a CFTC advisory committee on June 20, representatives from Getco, NYSE Euronext and Deutsche Bank AG (DBK) suggested that regulators adopt a broad definition of high-frequency trading to limit the potential for regulatory arbitrage.

“We wanted to keep it easy to interpret and difficult to game,” Deutsche Bank’s Greg Wood said at the meeting. “We deliberately did not want to define types of high-frequency trading strategies.”

Requiring registration and audits of automated trading algorithms would be a waste of regulators’ resources because of the cost and complexity of establishing unique identifiers, a working group of the CFTC advisory committee said in a summary of its findings presented at the meeting.

“Market abuse is not fundamentally a function of the means, speed or frequency of order entry and transactions,” according to the summary. “Focus should be on specific behaviors that undermine market integrity irrespective of the means or pace of order entry.”

To contact the reporters on this story: Joshua Gallu in Washington at jgallu@bloomberg.net; Silla Brush in Washington at sbrush@bloomberg.net

To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net

Views: 75

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega's 7 blog posts were featured
13 hours ago
tjdavis's 2 blog posts were featured
13 hours ago
Less Prone favorited tjdavis's blog post Track AIPAC
13 hours ago
FREEDOMROX's blog post was featured

MRNA VACCINES: Question

Hello my fellow sojourners,I know it has been five years since the Plandemic, but one question has…See More
13 hours ago
Less Prone favorited FREEDOMROX's blog post MRNA VACCINES: Question
13 hours ago
cheeki kea commented on cheeki kea's photo
yesterday
cheeki kea posted a photo
yesterday
Doc Vega posted blog posts
Friday
Doc Vega commented on Doc Vega's blog post Marjory Taylor Green Proposes Bill Abolishing Geoengineering or Weather Modification
"cheeki kea Marjory is in a daily battle with Democrats on the hill constantly coming up with more…"
Friday
Doc Vega posted blog posts
Wednesday
Mr. Sizzle favorited Less Prone's video
Wednesday
tjdavis posted a photo
Jul 15
Doc Vega posted a blog post

The Saga of Joe Adams May Have Solved What's Behind the Numerous Disappearances Going on in our National Forests

     The year is 2023 in September. A nature’s photographer and experienced survivalist, Joe Adams…See More
Jul 14
Sandy posted a video

Aron Siri's opening statement, Senate Hearing on Covid Vaccines, May 25

Opening statement Aaron Siri, Managing Partner, Siri & Glimstad, L.L.P.Senate Homeland Security and Governmental Affairs, Permanent Subcommittee on Investiga...
Jul 14
cheeki kea replied to cheeki kea's discussion Tartaria
"A smidgeon of facts have come to light. In English a misspelling suddenly occurred where an extra R…"
Jul 14
Doc Vega posted a blog post

The Cancel Culture Vulture

  Better to shut them down than hear their point of viewCancel culture coming after youHelping to…See More
Jul 12
Doc Vega posted a photo
Jul 11
Doc Vega posted a blog post

The Fingerprint

The Fingerprint On a dance with the unpredictability of the signals you sendA solemn pact with my…See More
Jul 11
Sandy posted a video
Jul 11
tjdavis posted a video
Jul 9

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted