need to add title here

Wall Street: The speed traders

June 5, 2011 5:00 PM

Steve Kroft gets a rare look inside the secretive world "high-frequency trading," a controversial technique the SEC is scrutinizing in which computers can make thousands of stock trades in less than a second.

Wall Street: The speed traders
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by betnmn January 29, 2012 10:53 AM EST
If knowledge is power, then foreknowledge is superpower.
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by PenetratedByBarry2 January 18, 2012 4:17 PM EST
The corruption due to these high speed computers is overlooked by the SEC and the FBI as they have been issued "hands off" by DOJ. All they are doing is looting any capital that would come to companies that provide jobs.

So we are letter them steal at will and doing nothing about it.

What do I know? Worked on a trading floor and a trading desk for over 20 years. These guys are paying no commissions so they can make money on less than a penny. The public has fled the markets and Wall Street will die. Then the law of unintended consequences comes in, which are never good.

Great work Bush and Obama....you killed the golden goose, although I would argue Barry likes it that way as he gets paid.
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by valentin-835 November 21, 2011 8:03 PM EST
It's kind of hard to believe that when such powerful instruments are used
everyday, some won't take advantage of them to do things they are not
supposed to.
Especially when the potential for huge, instant profits is there.
It will happen, more often than not.
One thing is certain. You have to be really stupid these days to park your
money in Mutual Funds.
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by pgmman September 19, 2011 11:25 PM EDT
As I said before, so say I now: someone figured out a winning strategy
to beat the Street at its own game, and everyone else is upset.
Cry-babies don't make money.
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by danashields August 12, 2011 9:26 PM EDT
WhatIfWhatWasGoingOnInTheWorldOfSlipperyHyperTradingWasCompletelyDifferentThanWhatTheExpertsHaveDescribedThusFar?

WhatIfTheLevelOfManipulationWasSoFarBeyondWhatYouHadEverImaginedInYourWildestDreams?WhatIfTheMarketWasSoLively,SoResponsive,AndSoAgileThatTheMassOfAnySingleOneOfTheseHeavy-liftingComputersCouldSendTheTheWholeTradingDaySpinningOffInASplitSecond?And,AsAConsequence, 99%OfTheResourcesTheseComputersEmployedWereSpentJustKeepingTheMarketFromTumblingIrrevokablyOutOfControlCatchingAnyone'sAttention?

WhatIfYouDiscoveredThatTheAlgorithmsThatQuantsWereWritingHadNicknamesThatParalleledSlickMovesInBasketballGames?IfTheMarketItselfHadReallyComeToBeThoughtOfAsNothingMoreThan'TheBall'?

WhatIf,BecauseOfThis,EachOfTheseTradingHousesHad,SomewhereAlongTheLine,SimplyCeasedToThinkOfItAsEvenTradingInAMarketAtAll,But,Instead,TradingOffEachOthers'AlgorithicResponses,ThrowingTheMarketAroundAsFastAsTheyCould?

WhatIfYouFoundOutThatTheNeedToPositionTheseComputersPhysicallyNearestAGivenTradingCenterWasOnlyToGetPositionedCloserToTheBallEveryMorning?ToGrabItFirst,ControlIt,AndMoveItInWaysThatDrewPredictedResponses--BasedOnPastBehavior--onThePartOfACompetitors'FormulasInOrderToCarveOutAProfit?

WhatIfYouFoundOutThatThePredatoryGameWasEntirelyPerfectEXCEPTForOneThing:TheAverage,'Normal'Trader,Who,ConductingTransactionsOutsideTheRealmOfThisPerfectMathematicalMedium,WereInadvertentlyIntroducingAnomolies...justLikeTheImperfectionOnABall?

And,MostImportantly,WhatIfYouFoundOutThatInThisRoleAs 'flaw'And'Spoiler',YourSingleActionInTheMarket,However,Miniscule,HadIndelibleEffectsOnOutcomesBecauseControlOfTheBallWasSuchAnExquisitelyCloseCall?MaddenlyClose?SoMuchSo,ThatYOUWereThePersonToWhomTheQuantsListenedCarefullyInAnEffortToDivineYOURNextMove?

WhatWouldYouDo?
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by Maple-pie June 10, 2011 12:54 PM EDT
From my point of view, naked shorting played a part in the last finacial crisis. Today it seems to be more blatant than ever. Is there a report
planned for the look into this problem?

Section 417 of the Dodd-Frank Act directs the SEC's Division of Risk, Strategy and Financial Innovation to study two short sale disclosure regimes. A transactions reporting regime would add short sale-related marks to the consolidated tape in a voluntary pilot program. A position reporting regime would entail real time reporting of investors' short positions either to the public or to regulators only. The Commission is required to submit a report on the study to Congress by July 21, 2011.

The public comment period will remain open for 45 days following publication of the request in the Federal Register.

When will American come on board with the rest of the world?

Several international exchanges have either partially or fully restricted the practice of naked short selling of shares. They include Australia's Australian Securities Exchange

Australian Securities Exchange

The Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....

India's Securities and Exchange Board
Securities and Exchange Board of India

The Securities and Exchange Board of India is the regulator for the securities market in India. It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament...
the Netherlands's Euronext Amsterdam, Japan's Tokyo Stock Exchange

Tokyo Stock Exchange
The , called or TSE for short, is located in Tokyo, Japan and is the second largest stock exchange in the world by aggregate market capitalization of its listed companies, second only to the New York Stock Exchange...

SWX Swiss Exchange
SIX Swiss Exchange , based in Zürich, is Switzerland's principal stock exchange . SIX Swiss Exchange also trades other securities such as Swiss government bonds and derivatives such as stock options.The main stock market index for the SIX Swiss Exchange is the SMI, the Swiss Market Index...

Japan's naked shorting ban started on November 4, 2008, and was originally scheduled to run until July 2009, but was extended through October of that year. Japan's Finance

Minister of Finance (Japan)
The is the member of the Cabinet of Japan in charge of the Ministry of Finance. This position is was formerly cited as being Japan's most powerful and one of the world's, because Japan had historically held the largest foreign exchange reserves...
Shoichi Nakagawa
"We decided (to move up the short-selling ban) as we thought it could be dangerous for the Tokyo stock market if we do not take action immediately." Nakagawa added that Japan's Financial Services Agency

Financial Services Agency
The is a Japanese government organization responsible for overseeing banking, securities and exchange, and insurance in order to ensure the stability of the financial system of Japan. The agency operates with a commissioner and reports to the Minister of Finance...
would be teaming with the Securities and Exchange Surveillance Commission and Tokyo Stock Exchange to investigate past violations of Japanese regulations on stock short-selling. The ban was subsequently extended through October 2010.

Singapore Exchange
Singapore Exchange Limited SGX: is an investment holding company located in Singapore and providing different services related to securities and derivatives trading and others...
started to penalize naked short sales with an interim measure in September, 2008. These initial penalties started at $100 per day. In November, they announced plans to increase the fines for failing to complete trades. The new penalties would penalize traders who fail to cover their positions, starting at $1,000 per day. There would also be fines for brokerages who fail to use the exchange's buying-in market to cover their positions, starting at $5,000 per day. The Singapore exchange
On May 18, 2010, the German Minister of Finance announced that naked short sales of euro-denominated government bonds, credit default swaps based on those bonds, and shares in Germany's ten leading financial institutions will be prohibited. This ban went into effect that night and was set to expire on March 31, 2011. On May 28, German financial market regulator BaFin announced that this ban would be permanent. The ban is effective July 27, 2010.

The International Monetary Fund issued a report in August 2010 saying that the German government's unilateral ban on some kinds of naked shorting succeeded only in impeding the markets.
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by docfreedaddy June 8, 2011 3:19 PM EDT
Wow. CBS a dupe for Wall Street. Wall street is rigged and it is by the blue-blood, loafer Connecticut and monkey suit NYC crowd. Goldman Sachs, Morgan Stanley, Merrill Lynch, etc all trade through personal contacts no one else has access to. Anyone can develop an algorithym. Few work well. Big banks all do this trading, but they are pissed off that you or I can participate too. It is actually a great equalizer and vert democratic, not exclusive.

The market is heading down because the economy is terrible and businesses are suffering. This is due to the housing bubble that sits at the feet of Wall Street. Movements of pennies in a stock is entirely different and had nothing to do with economic fundamentals of companies or a stocks trend. This is shallow reporting at best which just serves to focus the attention away from the prosecution of those large financial service companies and banks that truly manipulated the American people and Congress. We need the US and state governments to start effective prosecution of them and stop this disingenuous marketing/media blitz to deflect attention from them
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by kkrugerud June 6, 2011 2:16 PM EDT
There is one way to put this speed trading out of commission: by imposing a commission onto each and every trade, just as one is imposing upon he or she who makes any a trade in his or her own portfolio. But then again, as before, big banks are in bed with big government. And when times get tough, to which they will, guess who will come to the rescue with the bailout?
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by aboria June 6, 2011 12:36 PM EDT
As a small invester,how can one ever compete with the speedy robots? They eat the big fish,the rest eat shrimp
or sand?
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by pdegraff June 5, 2011 9:16 PM EDT
About the "Speed traders": I wish you would call it as it is. The robots are here. They are not in the form we anticipated but they are robots nonetheless and they are here now and they are taking over!
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