The fight that stopped NYSE trading

Excerpts from an energetic CNBC live debate that distracted traders on the floor of the New York Stock Exchange. BATS Global Markets president William O'Brien accuses "Flash Boys" author Michael Lewis and IEX's Brad Katsuyama of using fear about high-frequency-trading (HFT).

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commented 2014-04-02 13:34:29 -0400 · Flag
T.N. writes:

“But of course one of the realities behind all this is that some very powerful financial institutions are now realizing they have been had by the hft front-runners and are pissed…if this had been a scam simply perpetrated on the lumpen retail mo-mo chasers using their td-ameritrade and charles schwab accounts, no one in the wall street potentate crowd would have said a thing. “

i.e. Goldman Sachs (those Parasitic fucks) was getting out-shined at the very game they engineered with the NYSE take-over so now they have conveniently found Religion, these Assholes are so Transparent that it is an affront to my senses, and the Really delicious part, Yesterday’s Ramp Higher of Stocks, engineered of course to defuse the At Large Strike that should have taken place on Wall Street after the lumpen peasantry finally got look behind the curtain, Super Asshole Warren Buffet was probably in there hitting every Bid, we’ve got to keep the fabulous money machine where you put in nickels and walk away with dollars ALIVE ! if the peasants ever figure out that they are the Mark and the whole game is predicated on Separating Them (Public) from There Money We Are All Screwed ! Really Rich Stuff !
commented 2014-04-02 12:47:51 -0400 · Flag
A.R. writes:

Not being in the “industry” this looks to me to be a truly “rigged game”…the most revealing (and devastating) comment (for me) came from Lewis when he retorted to O’Brien’s (natch) protestations that the business model that he is so aggressively justifying was providing the market with necessary “liquidity”, that “volume is not liquidity”. Touché.
commented 2014-04-02 12:46:50 -0400 · Flag
Jc writes:

they found a legal loophole & exploited it. End if story.
What do the regulators do now, close it down or make minor changes?
while they are at it, look into the legal caterpillar tax strategy
commented 2014-04-02 12:46:11 -0400 · Flag
Vic writes:

best-in-class answer.
commented 2014-04-02 12:44:05 -0400 · Flag
Delroi writes:

I have been following this issue since 2006. In its details it is arcane to say the least, and has been one of the principle repositories for all those hyper-numerate engineering PHDs that use to create things (manufacturing, etc.) but then starting coming to wall street in droves about ~15 years ago (financialization uber alles).

The rudiments and concepts I understand, the math of course I don’t. zerohedge and marketticker.org have been publishing quite intuitive/understandable exposés since 2010 on the whole techno-scam.

This is simply super computer-enabled front-running, plain and simple. The apologists always mouth that the hft operators ‘supply liquidity’, the problem is, THE FACTS discredit that claim completely. The majority of stock quote bids today are unfathomable multiple phantom order spamming bombs done in nano-seconds to tease out the true buy/sell levels of a given stock, and then front-run those orders by decimals. It’s picking up micro-pennies by infinitesimal mispricing, repeated tens of millions of times, which adds up to a 5hitload of money at the end of the day.

The apologists never address the following:
  • phantom liquidity & multiple order spamming — real liquidity is often not provided, it’s just a lot of white noise volatility with no real intention to ‘make markets’ on a stock, but instead an intention to expose real buy/sell levels and then price against it. The hft operators often disappear when a stock is in free fall, they step away, so where is the ‘liquidity’ (i.e. market making) they were supposed provide?
  • co-location — the big exchanges are all public now, and they are being paid to allow ‘co-location’ of hft servers. In other words, because the exchanges are now profit-motive entities, they are giving certain market participants front-running advantages (by allowing their computers to sit next to or near the exchange’s computers which receive all the buy/sell orders) for a fee.
  • where are the regulators? Front-running is a jailable offense for people (caveat: if you’re a small fry…the market mandarins and political potentates of course are allowed to front-run…ever wonder why our d.c. legislators seem to be an anomalous community of expert ‘investors’ that always move in and out of stocks with enviable timing in front of regulatory and legislative actions?), but evidently for super-computers its allowed.


Katsuyama is a guy with a viable, profit-generating SOLUTION. Obrien came off as what he is, a desperate status quo guardian mouthing the same ‘liquidity/price execution’ fallacies to which all the hft apologists default without answering the absence of real liquidity/quote-spamming/co-location issues.

But of course one of the realities behind all this is that some very powerful financial institutions are now realizing they have been had by the hft front-runners and are pissed…if this had been a scam simply perpetrated on the lumpen retail mo-mo chasers using their td-ameritrade and charles schwab accounts, no one in the wall street potentate crowd would have said a thing.