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US Busts Insider Trading Hackers

Posted by Soulskill on from the go-big-or-go-home dept.

An anonymous reader sends news that U.S. authorities have dispersed an insider trading ring that broke into remote servers to grab press releases before their official publishing date. The group hacked into organizations called PRNewswire, Marketwired, and Business Wire, taking as many as 150,000 press releases over the past five years, including those involving earnings reports. The information was sold to other people who used it to buy and sell stocks. The nine people targeted in this sting netted approximately $30 million, while an SEC lawsuit targeting 32 individuals says the take was more like $100 million. Their scheme is a new type of distributed insider trading that didn't rely on leaked information from employees of any of the targeted companies. "They ran this like a business. They provided customer support: The hackers allegedly set up servers for their customers to access their information, and 'created a video tutorial on how to access and use one of the servers they used to share the Stolen Releases.' They responded to customer feedback ... Their fees were performance-based, and the performance was audited."

113 comments

  1. The stock market by Anonymous Coward · · Score: 5, Insightful

    is a huge joke. Just close it down. It's very little about investment anyway. It's mostly about people having inside information grabbing cash from people who don't. And high frequency trading. The sad thing is that Economists don't seem to see this as a problem. Well, maybe this type of event on a much larger scale could actually do good by showing how bad things really are.

    1. Re:The stock market by Etherwalk · · Score: 3, Informative

      is a huge joke. Just close it down. It's very little about investment anyway. It's mostly about people having inside information grabbing cash from people who don't. And high frequency trading. The sad thing is that Economists don't seem to see this as a problem. Well, maybe this type of event on a much larger scale could actually do good by showing how bad things really are.

      Because it's better if investing your savings and diversifying is hard?

      You want a way for not-super-rich-people to buy small chunks of companies and invest. It gives them a way to get a return on their savings.

    2. Re:The stock market by Anonymous Coward · · Score: 3, Informative

      Sure, there's irresponsible trading, but I don't think you understand the purpose of the stock market.

      Ownership of a business is referred to as equity. In a sole proprietorship, one person owns all the equity. But other arrangements like partnerships and corporations are common, in which many people own equity. That may be because they've all contributed to starting the business or later invested their cast to help grow the business. Selling equity can be done privately, which doesn't require a stock market. However, the best deal for the business and investors should exist when supply and demand are allowed to determine the price of equity, which occurs when stocks are publicly traded. This does require a stock market.

      Economists do view high frequency trading and similar activities as somewhat risky. That said, the solution is to regulate how such trading occurs, not close down the entire stock market. I'm sorry, but that's a really foolish comment. And as for this article, there will always be criminals and con men. The activities described are already illegal, and it's good the scheme was shut down. However, even if you did away with the stock market, there will always be scams and ways to steal people's money. I'd say that the stock market is public and regulated enough so that sufficient numbers of people are watching and it's actually harder to steal money from investors than if trading equity was only done privately.

    3. Re:The stock market by peragrin · · Score: 4, Insightful

      high frequency trading isn't investing. in fact anything after the initial sale of the stock by the business is no longer investing in the company. it is just trading.

      After the initial IPO the only way a company directly benefits from stock is when they go to borrow money. all those regulations and headaches just means you are giving away pieces of your company to people who want to strip mine the cash reserves, liquidate the assets and move on.

      however with a good cash flow a business doesn't need that equity, and can get loans as needed. So why do they need to risk losing their business?

      --
      i thought once I was found, but it was only a dream.
    4. Re:The stock market by Errol+backfiring · · Score: 2

      I think the purpose of the stock market is much more mundane: to make money. In whatever way. That is why you can "invest" in non-existing "products", like derivatives, futures on crops that will never be planted, even ad-words, and so on. Off course, this must be regulated. The point is that it isn't. Oh, there are a few rules to pretend, but that is basically it. There is a commission to pretend to guard the rules as well, but has shown to only pretend as well (they "investigated" the flash crash only on minute basis, while microsecond precision would be necessary, and concluded that nothing was wrong. That is even more fraud than trading with prior knowledge).

      Trading with large sums of money in non-existing goods is not only risky, it is downright harmful. Money has the value of the things you can buy with it. As long as people fool themselves into believing that futures on never-to-be-planted crops are worth something, it may unexpectedly look harmless. The moment people find out, the system collapses. Along with loads of money that should have been used for real transactions between real people in the first place.

      --
      Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
    5. Re:The stock market by MagickalMyst · · Score: 0

      "...but I don't think you understand the purpose of the stock market."

      The purpose of the stock market is to sucker people into supporting corporatism.

      --
      Political correctness is really just herd psychology pushed by insecure people who desperately seek social conformity.
    6. Re: The stock market by Anonymous Coward · · Score: 0

      I agree. It is a huge joke.

      Plunge protection team
      Circuit breakers
      Too big to fail

      We don't have a real market. There's too much government intervention to manipulate the market to the upside.

    7. Re:The stock market by Anonymous Coward · · Score: 1

      Except "investing in a company" used to mean buying a share of it (note that word) and then being paid a dividend based upon their trading success.

      Not it means buying a share of a company in the hope/expectation that the value of the share will go up and you can sell it to someone else for a profit.

    8. Re:The stock market by Anonymous Coward · · Score: 0

      You're new to this aren't you.

      The purpose of a stock market is for someone to invest money in a business venture, taking some of the risk and providing capital to the business. The business uses this capital, and when it makes a profit it returns part of that to the investors.

      You seem to think the purpose of the stock market is to trade the shares for profit. That is a more recent interpretation and not the original purpose. In fact this secondary purpose had created an entire industry around it whose purpose is simply to make money for themselves with no interest in the companies they are investing in.

    9. Re:The stock market by Anonymous Coward · · Score: 1

      "diversifying is hard"... Coming from someone who probably spouts "a house is an investment" on command, that's hilarious!

    10. Re:The stock market by ScentCone · · Score: 1

      So, I own small handfuls of shares in lots of companies, and they pay dividends. I've yet to ever sell a stock. Wait ... I once sold 20 shares of GoDaddy when they spooked me with some policy or another. But otherwise, I enjoy a bit of income from dividends, and absolutely DO like the fact that stocks like Amazon and Starbucks have gone up hundreds of percent since I bought them - more than is simply accounted for by currency devaluation. The companies are far more valuable than when I bought shares, and that's reflected in the share prices. What do you mean by "used to?"

      --
      Don't disappoint your bird dog. Go to the range.
    11. Re:The stock market by ScentCone · · Score: 2

      In fact this secondary purpose had created an entire industry around it whose purpose is simply to make money for themselves with no interest in the companies they are investing in.

      Except that the people who attempt to make money trading in stocks about which they are ignorant usually lose money.

      --
      Don't disappoint your bird dog. Go to the range.
    12. Re:The stock market by swb · · Score: 1

      There are ways to tweak it that might help, like some kind of decreasing capital gains tax index tied to how long securities are held. Create a financial disincentive for short-term trading and an incentive for buy-and-hold. The unintended side effect might be less market liquidity.

      I also wonder if there shouldn't be some mandate to pay of dividends. Stocks that don't pay dividends seem to only derive value from price increases in the stock, creating all kinds of perverse incentives.

      It might even effect compensation imbalance, since cash that would otherwise pay a dividend can be pumped into executive compensation.

    13. Re:The stock market by Imrik · · Score: 2

      A large portion of the stock market no longer pays dividends.

    14. Re:The stock market by Anonymous Coward · · Score: 1

      in fact anything after the initial sale of the stock by the business is no longer investing in the company. it is just trading.

      After the initial IPO the only way a company directly benefits from stock is when they go to borrow money.

      Not true. After the initial IPO, companies often sell additional stock to raise money.

      Also, the subsequent sales of the stock is still an investment in the company, in at least two way I can think of.
      1) If stocks were not traded after the subsequent sale, then there wouldn't be a market for people to unload their stock after they bought it. If you make the investment that much less liquid, then you are going to have a much smaller pool of people willing to invest in the company. The lower demand for the stock results in lower stock prices, meaning less money raised by the company in the IPO
      2) Buying stock on the market creates a way for employees to unload their employee stock options. Stock options are an incentive to employees, but it's not as much of an incentive if they've got nowhere to turn it into actual cash.

    15. Re: The stock market by 31415926535897 · · Score: 1

      It's irresponsible for a newly growing company to issue a dividend. Once a company has established it's profit margin and can't use that dividend money to invest in itself to grow to greater profits in the future, that's when it should consider using a dividend. Otherwise it's use of cash is suboptimal. Think about what apple has done in the last 1 5 years.

    16. Re:The stock market by Anonymous Coward · · Score: 0

      A business that does an IPO (or a secondary offering) vs borrowing (issue bonds, etc.) is essentially declaring themselves to be worthless. In other words, a business has a choice of paying say 5% return on a bond, or issuing stock... by issuing stock, they're declaring that in *their* (company management) view, the return on their stock will be *less* than the bond.

      Clearly if management thought otherwise, they would never sell any shares at all. With that in mind, most IPOs are scams to cash out. In many cases, the company doesn't actually *need* the money raised---like in the case of many companies that fully operate in China, yet had a US IPO at NYSE to raise billions of dollars from US investors...

    17. Re:The stock market by evilRhino · · Score: 2

      Except that the people who attempt to make money trading in stocks about which they are ignorant usually lose money.

      Did you read the article? People set up an illicit education program and were arrested for their trouble. The system *requires* the investors to be ignorant.

    18. Re: The stock market by Anonymous Coward · · Score: 0

      For Microsoft, that was 25 years. Long after they were profitable. The stock market is nothing but smoke and mirrors. I don't even trust the index numbers. All the news rage is about China and their propping up the own system. The US has been doing the same for much longer!

    19. Re:The stock market by ScentCone · · Score: 1

      A large portion of the stock market no longer pays dividends.

      So use the very purpose of the market to reward those companies that DO, and invest in them instead of another company that you think is unwisely re-investing its proceeds back into growing the company.

      That's the whole point of the market. Put your money where you want to. Mature companies pay dividends, but are less likely to increase dramatically in value. Younger, more hungry companies tend to have their stocks grow (or fall!), but hold off on paying dividends until they're well settled in. Nothing has changed in that respect for a couple hundred years, at least.

      --
      Don't disappoint your bird dog. Go to the range.
    20. Re:The stock market by Anonymous Coward · · Score: 0

      No. No, no, no. No. No, no. No.

      The system requires that all investors work from the same, publicly available information.
      Insider trading is when you're working from information which is not yet available to the public.

    21. Re:The stock market by Anonymous Coward · · Score: 0

      Naked shorting. Everything is ok as long as you naked short.

    22. Re:The stock market by Ol+Olsoc · · Score: 1

      Because it's better if investing your savings and diversifying is hard?

      You want a way for not-super-rich-people to buy small chunks of companies and invest. It gives them a way to get a return on their savings.

      I don't know about it having to be "hard", but insider trading is how the big boys and girls make their money. Otherwise it's just a lottery for the widdle folks. Insider trading is an integral part of the stock market.

      --
      The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
    23. Re:The stock market by Anonymous Coward · · Score: 0

      And yet, companies are now trying to limit #2 by being able to buy back stock options at a nominal price.

      http://techcrunch.com/2011/06/26/skypes-worthless-employee-stock-option-plan-heres-why-they-did-it/

      And yes, I recently received an offer from a start-up with something similar.

    24. Re: The stock market by Anonymous Coward · · Score: 0

      As long as the market is artificially pumped up by the Fed that strategy will work. The instant they stop you're going to wish you'd sold a lot of things.

    25. Re:The stock market by njnnja · · Score: 1

      If a company is profitable but isn't paying a dividend, then one of the following must be true:

      1) They are investing cash in new businesses or opportunities as quickly as they are bringing it in. A growing business with good opportunities should be doing this instead of paying out a dividend and stunting their growth.
      2) They are using their cash to buy back shares in the market. This extra demand for shares makes the price go up
      3) They save the cash. This increases the value of the firm and outside investors will bid up the share price ceteris paribus

      In all but the first case, the price of the stock in an efficient market must go up. So it is more than mere "hope" that the price goes up if the company doesn't pay a dividend. Unless they are reinvesting (and if they did that they wouldn't pay a dividend either), stock price appreciation is a perfectly valid way to increase shareholder assets.

    26. Re:The stock market by Anonymous Coward · · Score: 0

      What do you mean by "used to?"

      It means you are a bad person. People like you used to be guillotined, or shamed, not celebrated and worshiped.

    27. Re:The stock market by sociocapitalist · · Score: 1

      high frequency trading isn't investing. in fact anything after the initial sale of the stock by the business is no longer investing in the company. it is just trading.

      After the initial IPO the only way a company directly benefits from stock is when they go to borrow money. all those regulations and headaches just means you are giving away pieces of your company to people who want to strip mine the cash reserves, liquidate the assets and move on.

      however with a good cash flow a business doesn't need that equity, and can get loans as needed. So why do they need to risk losing their business?

      It's a question of quantity of money. If you need a few thousand dollars, your plan is good. If you want to compete against already existing big companies or very/extremely rich people you're going to have trouble as they have millions to use that you don't (i.e. R&D, infrastructure, marketing, salaries, etc). Good luck getting a ten million dollar (or whatever) loan from a bank that would let you compete.

      Even with great cash flow a non-market financed business is going to start more slowly and grow more slowly than a market financed business, as the market financed business can get huge amounts of money very quickly during the IPO (or subsequent issue).

      Investor confidence also plays into this - the more confidence people have, the more they're willing to buy your stock for, the more money you have to do whatever you want (vertical or horizontal expansion, buy out the competition, etc.).

      Once your company is big enough (read 'low risk enough') then you can sell bonds which are the loans that you might be thinking of. They're also traded of course so that doesn't change much against stocks.

      As far as control, and how to keep it, there are different ways. You can hold on to 51 or more percent of the voting stock and/or issue stock that doesn't have voting rights.

      --
      blindly antisocialist = antisocial
    28. Re: The stock market by Anonymous Coward · · Score: 0

      Correct, the US like China seeks to ensure their domestic economies flourish. However, the tools available and the way in which they are used are very different and not worth much comparison.

      What do you mean you don't trust index numbers? You think the DOW or S&P 500 are intentionally mis-calculated?

    29. Re: The stock market by Anonymous Coward · · Score: 0

      True. The real thieves never see justice. This is immenently a cover for them. Every now and then they "arrest" somebody to maintain the public's illusion that everything is up and up. Meanwhile, they keep robbing you blind for all to see. Harry Houdini is rolling over in his grave.

    30. Re:The stock market by shaitand · · Score: 1

      That's you and not representative of most investors. I also highly doubt Amazon is actually worth more than it was valued at when you bought it. Stock valuations are often 20-200 fold any reasonable market valuation. Amazon will likely never be worth (as an actual business, based only on profits) what it is currently valued at.

      People trading on the market who are actually looking at real economic indicators are rare. It's supply and demand so the game is all about pumping to create demand and emotion based trading. Every couple weeks a drug company has cured cancer or so they'll spin it. Every couple weeks Samsung, Intel, IBM, etc are making massive breakthroughs in computing (that never seem to reach the shelves of course).

      And high frequency traders plug in so they get the updates faster than you and I and straight up steal our money. It's the same game these hackers played but somehow legal.

      Putting a 30 day delay on all publicly traded stock purchases and a minimum holding period of 6 months and reverting everything back to paper with verifiable hashes should do the trick. It won't fix everything but it would fix a lot of it.

    31. Re: The stock market by shaitand · · Score: 1

      They are intentionally miscalculated... by high frequency traders who see updates and respond to them causing your buy order to be at a higher price or your sell to be at a lower one with them outright stealing a piece in the middle just like this insider ring was doing.

    32. Re:The stock market by shaitand · · Score: 1

      "In all but the first case, the price of the stock in an efficient market must go up."

      The problem is the efficient market part. If a stock is popular it's likely already valued beyond what the company could ever earn in a hundred years. The only relation between what a company is doing from a business perspective and the stock price is the number of positive news blurbs that can be issued to pump the stock (and be immediately forgotten by pretty much everyone who bought and/or sold the stock). The CEO giving an interview and spinning a strategy as the next big thing or spinning some marginal improvement in a lab of theoretical manufacturing in a positive way works just as well as earnings. Hell, they are better because in a couple months you can reuse the same material and nobody will notice.

      Few people keep stocks for any duration and mostly stocks are kept only as long as the upward price trend continues so people can try to trade them around at the highest price. Nobody is really intending to invest in a company they are trying to gamble on price fluctuations and beat the other traders. Even the executives don't care about the company itself, all they care about it pumping the stock price. A publicly traded chair manufacturer only cares about making chairs to the degree they can spin a development as stock pump news and nobody cares about anything that won't accomplish that within a couple years and few care beyond the current quarter.

    33. Re:The stock market by shaitand · · Score: 1

      "Insider trading is an integral part of the stock market."

      Of course that is what HFT is all about. But even before that faster and better links to the market data including after hours trading were available. If knowing and having the ability to trade based on pricing information everyone else doesn't have isn't insider trading nothing is. It's the ultimate insider trading, I don't need to know anything about your company. I just know the price went down so I fill the now too high buy order of someone who doesn't have the data yet thereby STEALING their money.

    34. Re:The stock market by sproketboy · · Score: 1

      "Economists don't seem to see this as a problem"

      Of course not. They are profiting from the system the way it is now.

    35. Re:The stock market by shaitand · · Score: 1

      As long as it's possible for anyone to get pricing data more quickly than others those people will be able to fleece those others. The simple concept of faster interconnection to the market and after hours trading is openly sanctioned criminal insider trading on every stock.

      The problem with the stock market is that the gains are funded from the losses of other market investors. The gains and/or losses should come from the gains and/or losses of the business you've invested in as they do with bonds.

    36. Re:The stock market by Anonymous Coward · · Score: 0

      "Of course that is what HFT is all about"

      Source? I've read many papers on HFT - scientific ones at that - and HFT is about two things: (1) liquidity provision (2) very short term arbitrage (ie: buy price is $1.00 on exchange A and sell price is $0.99 on exchange B - not really - that would be an illegal crossed market ... but with a forecast and different exchange fees, this is possible).

      There have been many non-scientific writers, including parent, who claim to know everything. There was even one widely publicized book by Michael Lewis which has largely been panned by evidence at this point.

      You might hate HFT. Lots of people hate things. But lets not pretend that it's based on evidence.

    37. Re: The stock market by KGIII · · Score: 1

      I think the issue is, to me, that when the SEC notices you and decides they do not like you then you are well and truly knackered. There is no escape. They can, will, and have hunted people down and I can certainly understand and justify the behavior. What I can not justify is their unwillingness to prosecute those who are intentionally (I simply can not think of any other way to put it - it must be intentional) ignored. That is not acceptable to me. People need to be prosecuted equally and I say this as someone who has some wealth built up - I deserve to go to jail if the bum on the street deserves to go to jail for the same offense.

      --
      "So long and thanks for all the fish."
    38. Re:The stock market by evilRhino · · Score: 1

      No. No, no, no. No. No, no. No.

      The system requires that all investors work from the same, publicly available information. Insider trading is when you're working from information which is not yet available to the public.

      This isn't true at all. If this were the case, there would be bans on company stock options, buybacks, and insider transactions. It's only the public that is meant to remain ignorant while investing.

    39. Re:The stock market by Anonymous Coward · · Score: 0

      So are firemen

    40. Re:The stock market by bws111 · · Score: 1

      Why would there be bans on buybacks? The buybacks are done to raise the stock price, not to get shares at a cheap price. Banning company stock options also makes no sense, as the options are not exercisable for quite some time. And insider transactions must be reported. An insider who makes a move before the release of news is going to be charged with insider trading.

    41. Re:The stock market by bws111 · · Score: 1

      Sorry, but that is just stupid. By your ridiculous definition, if I am on a desert island and you make a trade based on pricing information I don't have, you are a criminal.

      The correct test is not whether it is possible that someone gets information first ,which it always has been and always will be, but whether or not everyone has the same RIGHT to get the information at the same time, and they do.

    42. Re:The stock market by ayesnymous · · Score: 1

      Forget about trading. Just invest and watch your account go up. The stock market is up 200% over the past 6 years, and it's nowhere near done. After having 2 huge crashes in 8 years (2000 and 2008), the central banks will NOT allow another crash so soon - that would wipe out all confidence in the system and they can't have that.

    43. Re:The stock market by delt0r · · Score: 1

      Guess what. It is not illegal to insider trade if your a politician... Oh and lets not get started on the special treatment HFT get.

      --
      If information wants to be free, why does my internet connection cost so much?
    44. Re:The stock market by delt0r · · Score: 1

      To short a stock you still need to already have it.

      --
      If information wants to be free, why does my internet connection cost so much?
    45. Re:The stock market by Anonymous+Cow+Ward · · Score: 1

      Spoken like someone who doesn't know what they're talking about.

      --
      Examine even your most deeply held beliefs. Nobody is always right.
  2. Ran it like a business by Anonymous Coward · · Score: 0

    Seriously, why is anyone surprised about this? International Drug Cartels are also run like a business, with customers, employee benefits, performance evaulations, KPIs etc. Why do people expect this stuff to be unorganised/amateur crimes every time?

    1. Re: Ran it like a business by Anonymous Coward · · Score: 0

      And you know this ...how?

    2. Re: Ran it like a business by thinkwaitfast · · Score: 1

      He's Miguel Angel Felix Gallardo, posting anonymously.

    3. Re: Ran it like a business by Anonymous Coward · · Score: 0

      That's common knowledge. Watch any old mob movie for Christ sakes.

  3. High-frequency trading=respctable insider trading by BringMyShuttle · · Score: 5, Interesting

    Hackers go to jail for insider trading because it rips off punters without access to the inside information.

    So what about High-frequency trading? Investment bankers pay a premium to the stock exchange to connect their computers closer than everyone elses. They get inside information microseconds before those same punters, and milk them for it, and it's all legit. Isn't High-frequency trading just another kind of insider trading?

    http://www.motherjones.com/pol...
    http://www.nytimes.com/2014/04...
    http://www.wsj.com/articles/re...
    http://faculty.chicagobooth.ed...

  4. Like a business! by Anonymous Coward · · Score: 0

    They ran this like a business.

    The journalist probably included this line because he thought it was an odd juxtaposition that a group of criminals were using the same methods as "legitimate" businessmen...

  5. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 4, Insightful

    they make billions not millions so different rules apply

  6. Race and religious warfare behind the incident. by Anonymous Coward · · Score: 0

    The FBI indictment lists all nine names and all of them are ethnic slavic. The slavic orthodox are still angry that the franks and the Vatican ransacked Constantinople during the fourth crusade in 1204AD and are seeking a revenge. They hurt us where they can (military is not one of those) and they hurt us where it's painful (economy is one such thing west of the Carpathians).

    1. Re:Race and religious warfare behind the incident. by Anonymous Coward · · Score: 0

      Can we all agree that crying "RACE WAR!, RELIGION (ous WAR), or TERRORISM!" is the new Godwin?

  7. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 0

    No, it isn't.

    HFT is merely capitalism in its purest form - the more money you have, the more advantage you have, and the more money you will accrue at the expense of people without pre-existing capital. But it's based on public information so it's not insider trading.

  8. TFA is NOT about high frequency trading by Anonymous Coward · · Score: 1

    So many of the comments thus far have discussed high frequency trading. This story isn't about high frequency trading. There have been similar things in the past involving HFT, like a server ready to disseminate an announcement from the Fed being hacked and orders being placed a few milliseconds before it was physically possible to react had they waited for the official release. That's insider trading that just happened to involve HFT.

    Where HFT is characterized as insider trading, it's because servers are set up in locations that allow them to see orders before the data can reach other traders. In the past few years, the playing field has leveled between trading firms so that everyone has quick access to that information. Coupled with decreased volatility in the markets, this has reduced the profit margins from HFT and driven many of those firms out of business. This also means that HFT traders really don't have insider information any longer, if everyone else gets it with roughly the same speed.

    This is about companies being hacked to find press releases and other data before being released to the public. This is on the scale of hours before the information is released, not milliseconds. This is about breaking into servers to get information about things like earnings, deals, and mergers hours before the public finds out, and then trading based on that information. That's really quite different from the supposed "insider information" that drives HFT.

    It's two completely different things. So many comments have gotten that dead wrong so far.

  9. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 1

    No, because this access is available to everyone, for a certain fee. If a company would offer 'earnings reports' in advance to general release for a fee (bad example, this would be illegal from the company, but you get the idea) people buying this would also no be doing insider trading.

  10. Corruption by Iamthecheese · · Score: 3, Informative

    Meanwhile it's completely legal for members of Congress to inside trade

    --
    If video games influenced behavior the Pac Man generation would be eating pills and running away from their problems.
    1. Re:Corruption by delt0r · · Score: 1

      Yea, this is truly hilarious...

      --
      If information wants to be free, why does my internet connection cost so much?
  11. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 3, Insightful

    It would be illegal because it was insider trading so yeah that is a really fucking bad example of something that wouldn't be insider trading.

  12. And charges for their customers? by advocate_one · · Score: 1

    Why have they not been charged?

    --
    Donald 'Duck' Dunn: We had a band powerful enough to turn goat piss into gasoline.
    1. Re:And charges for their customers? by Anonymous Coward · · Score: 0

      That would be like a dope dealer narcing out another dope dealer's customers. You narc out your *competition*, not your potential clientele, who will now turn to you for their daily fix of "insider information".

  13. Re:High-frequency trading=respctable insider tradi by Richard_at_work · · Score: 5, Insightful

    Reacting quicker to publicly released information is not illegal, no matter how much you personally hate high frequency trading - just because you ensure you have an advantage in the speed of reaction over other people doesn't make it insider trading. Lets say that HFT is banned, reacting to releases before other traders can still net you a huge advantage, even if you are only allowed one trade a second or minute. Its that first trade (either sale or purchase) at current market prices which can make your profit.

    So HFT is banned, releases are via email or direct notification and all trades have to be manually entered - how quickly does the press release reach your inbox, how quickly can you type, what if your email or notification server is backlogged, how quickly can someone scan a release for the relevant details (should I buy or sell?), and how quickly can you enter those details into the system.

    There are always ways to shave time off of reactions, no matter what approach you take.

  14. A Glimpse to how NSA works by Anonymous Coward · · Score: 0

    NSA is acting the same way, or any other intelligence agency in the world. They collect information creates data repository and uses this data, or make available to be used by sister organizations, in order to predict the future.

    More importantly, agencies get the funding the same way: by "correlating" it to the value. It is not yet denied that NSA does not use their data for insider trading.

    The are two distinct difference. First one that NSA collected data is 99.9% unused and useless. The other difference is that NSA operations such billions and billions of dollars of taxpayer money, while Ukrainian's racket was a profitable enterprise with only a fraction of public funding (hackers were taught in public schools, right)?

  15. Re:High-frequency trading=respctable insider tradi by ScentCone · · Score: 2

    Isn't High-frequency trading just another kind of insider trading?

    No. That's like saying that you should be penalized because you're smarter and can think more quickly than the guy next to you. You both can make the same arrangements to (for example) become aware of a new request for bids on some project ... but because you position yourself to be able to put every available second before the due date to put together a more attractive offer, and figure out how to respond persuasively in a way that's more profitable for you than it is for the slower, dumber guy standing next to you, you'll be ahead of the game. It's not FAIR that people who take the time and invest the resources to more quickly respond to opportunities end up having more opportunities. Not FAIR! Waah!

    Except, it IS fair. Because they're responding to published information, not to insider information that isn't supposed to be disclosed (yet).

    --
    Don't disappoint your bird dog. Go to the range.
  16. Two forms of legalized fraud by Anonymous Coward · · Score: 1

    Biggest problem: delayed price quotes. Often delayed by 15-20 minutes!!

    So the small investors are being told a false price, small traders buying and selling stocks are LIED TO ABOUT THE PRICE INTENTIONALLY, and the market intentionally sells the malicious deception of customers to the bulk traders who can afford the real time feed. "Here buy this feed, the ordinary joes we lie to about the price, but this is the real one and it gives you an advantage over them".

    Imagine if a shop marked goods at a false price, only telling you the real price after checkout... how could you make the right price choice at the shelves if the incorrect prices are shown?

    It's a false market and its one created deliberately by the stock market! They should be required to show the true price to the best of their ability to everyone, and make profit from the trading fees ONLY. As it is they participate in a form of fraud (mis-pricing to create deceived stock buyers and sellers, so they can sell an advantage to others).

    It is fraud and because the stock markets are big business, with political clout this fraud is never tackled by law. But fraud it is nevertheless.

    -------

    HFT's scam is a different problem, it isn't the speed thats the issue, its that people can place orders without the intention to ever make the transaction. Relying on the slowness of the market computers compared to their ability to place and remove orders.

    They should be required to hold the order past a fill or reject state, so the market has time to compare the placed order against the market book to see if it is filled or not currently.

    Placing fake orders to create a false market is no different than a "mock auction" fraud. Again the stock markets are complicit in this, they offer HFT access because they can sell it, but they're really selling the right to place and remove orders faster than the market can fill them, i.e. a way to place orders that can never be executed.

    1. Re:Two forms of legalized fraud by Anonymous Coward · · Score: 0

      The biggest and oldest fraud of course is fractional reserve banking, where the enterprise would collapse immediately if everyone tried to withdraw their "deposited" funds. If you did this with a grain elevator or warehouse, you'd go to jail.

      Really, our entire economy is based on fraud and fraudulent economic theories.

    2. Re:Two forms of legalized fraud by KGIII · · Score: 1

      You can pay to get real-time data (or as close to it as possible in your location and the speed of the infrastructure). The trading website that I use purports to do just that - they display the real time price or as close to it as possible. There is some lag, of course. I could do things to decrease that lag including going to the floor directly to get my information. Well, I think I would have to be on the observation deck. I suppose I could get licensed and go to the floor directly.

      If you are going to claim that the barrier to entry is a higher cost to do those things then, well, I would like to point out that it is not unfair that I get to buy a BMW while you are stuck in a Ford Focus. I was more able to capitalize on my effort than you, if the above is true, and this is not unfair - it is just how things are. You are, for instance, in a very small percentage of advantaged people who is able to own a computer and access the internet. That is hardly unfair - it is just how it is. You may say that it is unequal, I would agree with that, but it hardly unfair without needing useless mental gymnastics and belief in unicorns or deities.

      --
      "So long and thanks for all the fish."
    3. Re:Two forms of legalized fraud by Actually,+I+do+RTFA · · Score: 1

      you are going to claim that the barrier to entry is a higher cost to do those things then, well, I would like to point out that it is not unfair that I get to buy a BMW while you are stuck in a Ford Focus

      Can we distinguish between capital investments and consumer goods? No one (here) is saying you getting a BMW is unfair. What people are saying is that the stock market is a pay to win game that results in positive feedback loops. And it's kinda ridiculous.

      Imagine this: I pay someone at a company for advance notice of their sales figures. Classic insider trading. How is it different to pay someone to know what the stock price is several microseconds before anyone else, so I can respond first?

      --
      Your ad here. Ask me how!
    4. Re:Two forms of legalized fraud by KGIII · · Score: 1

      One is knowing the market and the other is knowing the business?

      --
      "So long and thanks for all the fish."
    5. Re:Two forms of legalized fraud by Actually,+I+do+RTFA · · Score: 1

      So, just to be clear: doing research on teh company I'm investing in to a degree other people cannot: illegal insider traidng. Doing automated research on what offers are currentyl out there, with no information at all, perfectly fine?

      --
      Your ad here. Ask me how!
    6. Re:Two forms of legalized fraud by KGIII · · Score: 1

      That sums it up well enough for me. That will keep you out of jail too. Do not ask Bob who works for WXYZ to give you hints on when Widget R is coming to market AND then act on that information. You can ask him but you can not then invest in, short, or invest (or short) a competitor based on that information and, frankly, they will assume the worst if you did turn out to have any information.

      Now, if you somehow knew that there was a glitch that let you sneak in and buy stock a little faster and then sell it almost immediately you'd be crazy not to take advantage of that. I, personally, use Google News and (I know this sounds crazy) Slashdot (as well as a number of other sites) and I read the comments and then I base my investments on things like that.

      Often I do the exact opposite of what is suggested, by the way. "Do not buy M$ stuff!!!" That is usually a good indicator that it is time to invest in MSFT again. I am currently heavily invested in Tesla. I bought 2000 stocks at $25 and they are now worth somewhere near $245. I noticed all the folks ranting about Tesla and realized that they would be a thing.

      I have two portfolios. One is not in my hands and I do not touch it. It sits in an investment firm, so to speak. The other one is just play money - like Tesla stocks mentioned above. I do not really know what I am doing but I have spent a lot of time learning about the market and how it works and have been managing my own "small" portfolio for quite a while now. I have actually only invested a small amount (comparatively) on my own and have actually tripled the value. I have another hobby of funding municipal bonds. Those are long-term investments too. Even my stock picks are generally long-term.

      Anyhow, I am not an expert and consult a financial advisor. The usual boilerplate. YMMV and may cause insomnia, do not take while driving, if you get an erection lasting longer than four hours call your neighbor's wife.

      --
      "So long and thanks for all the fish."
    7. Re:Two forms of legalized fraud by Rich0 · · Score: 1

      You can pay to get real-time data (or as close to it as possible in your location and the speed of the infrastructure).

      Isn't that a bit like Walmart displaying yesterday's prices on the store shelves and on their advertising, and you find out what your real bill is after you hand them your credit card? But, for a modest fee they'll show you today's prices instead?

      I get that commodity prices change in realtime. I don't propose that when you are quoted a price that it be valid for a day or anything like that. However, I see no reason that anybody shouldn't just be able to see what the price of a commodity is at any time, accurate to the time at which the price leaves the webserver or whatever.

    8. Re:Two forms of legalized fraud by Anonymous Coward · · Score: 0

      Oh no, you *do* see the data in real time when you have something like eTrade. However, Google or Yahoo would show you old data. Not all services are equal either. The "real time" is also influenced by jitter, line noise, distance, and the number of hops. You could, theoretically, get the data right at the pipe pretty much and some HFT do.

      KGIII (Posted 50 times today it seems.) I really should sleep.

  17. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 0

    It's not like saying that at all. You obviously don't understand the issue of co-location tiers w.r.t. HFT. The issue isn't the algorithms or access to faster computers, it's paying to receive trade data before your competitors do. It's not that one guy is fast and one guy is slow, it's that both guys are the same speed so one guy pays the house to have an edge. Since either guy can do so but there's only one edge to buy, it's a bidding war, and the person who starts with greater resources wins. If you think that is what "fair" means, you need to take a course in the English language. "Fair" does not mean "biased towards one party". If all parties have equal resources at the outset it would be somewhat fairer, but that's not the case.

  18. Re:High-frequency trading=respctable insider tradi by Antique+Geekmeister · · Score: 4, Insightful

    But the high frequency trading purchases and sales are, effectively, technologically assisted "pump and dump". They don't hold most stocks for even 60 seconds, and rely on the "forgiveness" of the puchasing system to discard trades they don't ever actually complete, to avoid transaction fees and to discard trades which might lose them money. The positive feedback of one HFT making a few puchases bumps a price incrementally, the next HFT buys some on speculation, the first sells and buys more, and they heterodyne off each other and the other shortsellers until the stock price hits a cap imposed by the other, slower, negative feedback in the market. Then they both shortsell on the way down, draining the potential profits from other, longer term investors on the way up and the way down.

    HFT makes its money, not off of investment, but off of pure "arbitrage", off the churn in the market. It's quite destructive and drains the profit right out of normal buying and selling.

  19. Re:High-frequency trading=respctable insider tradi by Antique+Geekmeister · · Score: 1

    Please excuse me: on the way up, hey heterodyne off the other HFT traders and "real" investors increasing prices and also engaging in short term transactions, not off the shortsellers.

  20. Re:High-frequency trading=respctable insider tradi by ScentCone · · Score: 1

    The issue isn't the algorithms or access to faster computers, it's paying to receive trade data before your competitors do.

    No, it's investing the infrastructure and street address that lets you see and process - as quickly as possible - the information that's simultaneously released to everyone. If we were relying only on radio broadcasts from NYC for stock press releases, would you consider taking advantage of the speed of light to be an unfair advantage? Yes, those shrewd bastards who have their radios closer to the transmitter will hear the broadcast a moment before the guy on the west coast. UNFAIR!

    Since either guy can do so but there's only one edge to buy, it's a bidding war, and the person who starts with greater resources wins.

    Right. If you bring more to the table than your competitor, you usually do better than your competitor. Why is it you feel that's unfair? Should somebody who does LESS work, or risks less, be subsidized or otherwise granted an advantage over the person who risks more or does more? You consider THAT fair? I work my ass off. Why should someone who's not willing to work as hard be granted the same results? Let me guess: you're an "everyone is entitled to the same outcome" SJW type, right? But when you go shopping for a car, you end up doing business with the company that actually treats you better and offers you a better price, right? Why? Shouldn't you reward the inferior dealership that wants to charge you more and give you crappier service? Of course you should. Social Justice FTW!

    --
    Don't disappoint your bird dog. Go to the range.
  21. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 0

    either guy can do so but there's only one edge to buy, it's a bidding war

    You are incorrect. An effectively arbitrary number of entities can co-locate and buy the edge. It's actually a much more egalitarian situation than, say, the limited number of potential locations for fast food near a train station.

  22. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 0

    You clearly don't understand what HFT is and how it works. It's computer-assisted financial asset manipulation wherein I jump the queue and force you to pay more by placing a higher bid for the instrument you're trying to buy, causing its price to go up causing you to pay more. Billions of dollars have essentially been stolen in this manner. It has to stop.

  23. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 0

    The problem is the way the reaction time is measured. If everyone would receive the same information at the same time, the reaction time advantage would belong to the fastest. The issue here is that the information is not available to the market simultaneously due to man made and natural causes. Drawing the line between those two is a matter of willingness to create as a fair market as possible, with a proportional effort and expense of course.

  24. Re:High-frequency trading=respctable insider tradi by Richard_at_work · · Score: 1

    Short of getting everyone into a room, locking them a door, handing them all sealed envelopes with the info, ensuring everyone has read and understood the release and only then demolishing all the walls simultaneously to release the people, how do you propose making sure everyone gets the information at exactly the same time?

    I see absolutely nothing wrong with paying for a better physical placement of a server to gain an advantage.

  25. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 0

    the information that's simultaneously released to everyone

    But it isn't received simultaneously. The co-locator gets it first, before everyone else. They temporarily have information that no-one else has.

  26. Re:High-frequency trading=respctable insider tradi by rahvin112 · · Score: 1

    HFT has reduced the total arbitrage, decreased market to market differences and provides a massive liquidity boost to the entire market. The only time one of these HFT systems went bad the only people it hurt was the HFT company.

    People like you that are opposed to HFT because you read an article about it don't realize how markets work. If there wasn't HFT there would be market makers and they take far MORE than a the miniscule percentage that HFT takes. When I first started trading you couldn't trade a stock without giving 3% to the market maker on the trade. Today HFT supplies that market liquidity and you can make trades with less than 1/4 of a percent going to the HFT supplying the liquidity.

    Learn how the markets work before you lambast HFT.

  27. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 0

    So charge a very small transaction fee for every stock purchase so pure speculation is thwarted and investing is actually rewarded. But that would make too much sense, then these criminals would have to find real jobs.

  28. Re:High-frequency trading=respctable insider tradi by sociocapitalist · · Score: 1

    Reacting quicker to publicly released information is not illegal, no matter how much you personally hate high frequency trading - just because you ensure you have an advantage in the speed of reaction over other people doesn't make it insider trading. Lets say that HFT is banned, reacting to releases before other traders can still net you a huge advantage, even if you are only allowed one trade a second or minute. Its that first trade (either sale or purchase) at current market prices which can make your profit.

    So HFT is banned, releases are via email or direct notification and all trades have to be manually entered - how quickly does the press release reach your inbox, how quickly can you type, what if your email or notification server is backlogged, how quickly can someone scan a release for the relevant details (should I buy or sell?), and how quickly can you enter those details into the system.

    There are always ways to shave time off of reactions, no matter what approach you take.

    The difference being barriers to entry. If anyone could set up in a market colo and trade then it would be a level playing field. As it is, you have trading houses that have the licenses and so can HFT and everyone else is locked out.

    No such barriers to entry exist for the other information release mechanisms that you list.

    --
    blindly antisocialist = antisocial
  29. Re:High-frequency trading=respctable insider tradi by zentigger · · Score: 1

    HFT is not about reaction times to public information. It is about exploiting timing so that a customer placing a single large order that can be fulfilled only through many different stock exchanges is taken advantage of by predatory stock scalpers. Scalpers, upon noticing the order would not be able to be fulfilled by one single exchange, instead buy the securities on the other exchanges, so that by the time the rest of the large order arrives to those exchanges the scalpers can sell the securities at a higher price. All these events happen in milliseconds not perceivable to humans but perceivable to computers. It really is about exploiting information before anyone else has had a chance to see it, which is essentially insider trading.

    --

    the above is my personal opinion and does not necessarily reflect that of the little voices in my head

  30. Re:High-frequency trading=respctable insider tradi by ScentCone · · Score: 1

    But it isn't received simultaneously. The co-locator gets it first, before everyone else. They temporarily have information that no-one else has.

    Right. Just like people who receive important documents by USPS certified mail coming out of a reporting agency in NYC would get it much more quickly in New Jersey than they'd get it in California. Why? Because the person who's bothered to keep an office or a PO box 10 miles away is going to receive stuff more quickly than the one who keeps their office thousands of miles away.

    Just like it takes longer for information to make it across a few hops and into a server across the continent than it does to make it across the hall. Are you really suggesting that we slow down everyone's connections to all of the sources of financial press releases so that someone who wants to operate their brokerage out of a grass hut in Fiji using TCP/IP over Smoke Signals won't be at a "disadvantage" compared to the brokerage that invests in proximity to the industry in which they're participating?

    --
    Don't disappoint your bird dog. Go to the range.
  31. Re:High-frequency trading=respctable insider tradi by ScentCone · · Score: 1

    Which queue is being jumped? Transactions are run serially.

    Let me guess: you think that when ten sprinters take off in a race, the guy who's faster wins because he's "jumped ahead" unfairly, right? Yeah.

    --
    Don't disappoint your bird dog. Go to the range.
  32. I have to say that was f**king briliant! by Anonymous Coward · · Score: 0

    I must say that as hacking exploits go that was very clever.

    Sadly now that the idea is out in the wild I am sure that all of the cool kids will give it a go.

    I mean why would you risk LOC attacks on a major corp (or what ever the latest game is) when you can now just skim a few billion off the top of earnings or announcements the same way the big boys and their Government flunkies do?

    This method really levels the playing field.

    Nice.

  33. I seem to recall by Anonymous Coward · · Score: 0

    I seem to recall that there wasn't even much "hacking" involved, this was mostly a URL incrementation problem, wasn't it?

    PRNewswire would publish press releases at predictable URLs, let's say the most recent one was at prnewswire.com/release/3701680217.html. The numbers weren't directly incremental, there would be gaps of a few thousand numbers in between releases. Somebody wrote a spider to go looking for 3701680218.html, 3701680219.html, etc. through the next few hundred thousand possible URLs and in this way they were able to discover press releases that had been staged on the website, but not announced to the public, yet. Then they traded based on the information in those releases.

    Or am I thinking of another case?

  34. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 0

    That very small transaction fee you speak of takes the form of exchange connection fees and the premiums firms pay to have closer physical connections. It doesn't matter how narrow the margin is, someone will find a way to make a buck off it. Push the profit margins into the loss territory and the goalpost for what constitutes speculation moves with it. Try again.

  35. Legalize insider trading NOW!!!! by Anonymous Coward · · Score: 0

    Points to consider:

    1. Congress is immune to insider trading laws. If they can be immune, then everyone should be immune.

    2. The Fed regularly receives and sends out leaked reports. Again, this is business as usual. Just make it legal - allow everyone to trade this way.

    3. Every trader makes trades based on knowledge that not everyone else in the universe has. Trading is always "insider trading". If I buy a chocolate ice cream cone, it's because I have the secret knowledge that I prefer the chocolate taste more than the $5 I pay. The seller doesn't even know I would be willing to pay $6.

    4. Who was harmed by this, exactly? You didn't lose your stock! The value of your stock may go down, but you only own the stock, not the stock's value. The stock's value is determined by what's in everyone else's brains. Sorry, you don't own other people's brains.

    5. "Insider" trading helps distribute information - e.g. price signals - more efficiently to all areas of the market than forcing the outsiders to have to wait. The more efficient communication of price signals means a more efficient economy. This is good for everyone!

    6. I think executives should be banned from insider trading, but that's just my opinion. If you don't like how the company is run, DON'T invest in it. (It should be up to the board to decide. They could, for example, ask executives be contractually bound to pay the company back if they are cheating. )

  36. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 0

    And then you open the door, and whomever can run fastest to their terminal and enter the order wins.

    You haven't solved the problem. You just made sprinting pay really really well !!

  37. Re:High-frequency trading=respctable insider tradi by lambsonic · · Score: 1

    There are always ways to shave time off of reactions, no matter what approach you take.

    It is not difficult to formally solve this problem with constraints at the exchange. If timing is the issue, then just randomize it. Just delay the evaluation of bids for the timing-sensitive period, and replay the bids with scrambled timing at the end of the period. This would effectively distribute the advantages and disadvantages in timing across the bidders.

    The issue is not technical. The issue is political. No one wants to do any of the number of ways to fix this, and there are many ways to fix this that would work. I just came up with one off the top of my head, which certainly means that there are dozens more, and probably at least a dozen better ones.

    --
    # make clean sig
  38. Re:High-frequency trading=respctable insider tradi by Anonymous Coward · · Score: 0

    >Reacting quicker to publicly released information is not illegal, no matter how much you personally hate high frequency trading

    Agreed, the reason I hate HFT is because they make money constantly but whenever they F up and destroy 99% of a stock's value, they get their butt magically saved via rollbacks from TPTB and magical cash infusions from the Fed's plunge protection team.

  39. Re:High-frequency trading=respctable insider tradi by KGIII · · Score: 1

    In that case the information. is about the market itself and not about the knowing insider information about the business in question. This may be immoral (I am not going to judge, though I invest a bunch it is a hobby and I will openly state that I do not have enough knowledge to judge) but it is not illegal. You can have information about the market, itself, and act on it. You can not have information about a business and act on it. An example, when I sold my business it was purchased by a publicly traded company. There was a point where I knew the sale was going to go through. I was also being paid in stocks, partially, but that is beside the point. In between the time that I knew the sale was going to go through and the time it was publicly announced I would have been tempting fate to have acted on that and bought or sold stocks in the soon-to-be parent company. As an aside, I was also restricted from selling the newly acquired stocks in the parent company for a period of time as per the terms of sale. I did not need to sell them so I kept the stocks and they grew. That is what tweaked me enough to actually decide to poke at the market. I do surprisingly well and you would be shocked at what I use for my trading strategy.

    --
    "So long and thanks for all the fish."
  40. Re:High-frequency trading=respctable insider tradi by KGIII · · Score: 1

    No, he is saying that the person closest to the starting gun will hear the sound first and have an advantage over the guy who is further away - even if it is a trivial advantage to human perceptions.

    I do not agree with him, I do not think, but that is not what they are saying at all - using your analogy. As a hobbyist, well, I do not see a problem with HFT. It is legal and I do not feel qualified to determine if it is moral.

    --
    "So long and thanks for all the fish."
  41. HFT != Fundamental Info Acess by Anonymous Coward · · Score: 0

    The HFT debate is more about being able to unfairly ACCESS and REACT to order flow. Is paying 2 million per month in fees in order to co-locate and get the data flow 150 milliseconds before you do at home fair? I think it is fair. However most HFT would dry up under a few simple rules:

    Require Bids/Asks to be honored by the submitters for a specified amount of time, say 1 second.

    Add a small random amount of time to each Bid/Ask before it goes into the NBBO que, say 50-200 milliseconds.

    A tax on each transaction, say 0.001%

  42. Re:High-frequency trading=respctable insider tradi by OdinOdin_ · · Score: 1

    Just transaction tax everything, in an inversely scaled amount to the time between you buying/selling that same kind of item.

    So if you buy, buy, buy, wait a month, then sell, sell, sell, you don't pay much/any transaction tax.

    But if you buy, sell, buy, sell, buy, sell, you get transaction taxed to extinction.

    Now make it so you publish your sell price for a whole hour, before you finalize trades for it.

    Now make it so that you cancel too many sell orders, compared to those that made it to the end of the hour but may (or may not) not have receive any buying offers, you get a charge applied.

    Now make it so that the all buyers making offers get a pro-rata split of the shares being sold.

    Now increase transaction taxes when the number of shares in the selling order is lower than the number of buyers. An exercise for the sell to predict how large in volume the sell order needs to be to not get penalized here.

    All this to take the money out of the transaction part, and place it back into the, I'm holding this stock, so I'm taking a risk the business will do well in the future, compared to holding cash.

    So the next question, who gets to spend the transaction taxes and on what ? Government coffers, as the people effectively permit this activity to go on under the protection of the state. Other suggestions ?

  43. Re:High-frequency trading=respctable insider tradi by radarskiy · · Score: 1

    If the trades are the fastest thing on the network, then they can't be based on any information about the market except other trades.

  44. Re:High-frequency trading=respctable insider tradi by sjames · · Score: 1

    I do know how they work, and that is crap. The HFTs don't create liquidity, they just swim in it. If there are no sincere buyers and sellers, there's nobody for them to jump in front of.

  45. Re:High-frequency trading=respctable insider tradi by sjames · · Score: 1

    Or making the 'market clock' tick in human scale quanta.

  46. Re:High-frequency trading=respctable insider tradi by sjames · · Score: 1

    HST != press releases.

  47. Re:High-frequency trading=respctable insider tradi by ScentCone · · Score: 1

    Right. HST-ing reacts to all sorts of released data, market conditions, twitches in reported data, rulings, currency fluctuation, and actions by the invested-in companies. All stuff that's - for publicly traded companies - exactly as available as press releases. But more quickly actionable by people who position themselves to react to it on the fly.

    --
    Don't disappoint your bird dog. Go to the range.
  48. Re:High-frequency trading=respctable insider tradi by Antique+Geekmeister · · Score: 1

    Thank you, I misused that term there.

  49. Re:High-frequency trading=respctable insider tradi by sjames · · Score: 1

    Still wrong, look it up. It's actually a practice that involves making a bazillion insincere trade offers to get a sense of the market, then jumping between two parties who are about to make a deal and skimming a bit for yourself.

  50. Re:High-frequency trading=respctable insider tradi by delt0r · · Score: 1

    Insider trading is legalized for particular parties. I really am not joking. ie politician can insider trade. In the US at least.

    --
    If information wants to be free, why does my internet connection cost so much?
  51. Re:High-frequency trading=respctable insider tradi by delt0r · · Score: 1

    Oh FFS. HFT doesn't do shit to liquidity... because to trade at high frequency the stock already has to be LIQUID. And since fucking when is liquidy defined in microseconds. In the good old days when it could take a weeks to sell a stock (and this is still true for low volume stocks, and HFT won't touch those) sure improved liquidity was a good thing. But not when your talking seconds. In fact anyone who starts taking about improving liquidity over seconds clearly doesn't understand the concept.

    And on top of all that HFT is reserved for special people. If it was soo good for the market. We would all be allowed to do it. But we can't because its BS.

    --
    If information wants to be free, why does my internet connection cost so much?
  52. Re:High-frequency trading=respctable insider tradi by Rich0 · · Score: 1

    HFT has reduced the total arbitrage, decreased market to market differences and provides a massive liquidity boost to the entire market.

    The problem is that none of these are useful services on the scale that HFT does them.

    If I got to sell a stock and have it sold in 10 seconds, I'm pretty happy. Market makers and such which make that possible do provide a useful service to the economy, versus me having to sit on my order for three days until somebody else notices it.

    On the other hand, being able to sell it in femptoseconds instead of microseconds doesn't add real value. It just becomes a pay-to-win scenario.

    Likewise, keeping international markets in sync so that the price isn't $5 in NYC and $10 in Tokyo is a useful service. On the other hand, ensuring that when the price goes up by 0.01 in NYC that the price goes up in Tokyo by 0.01 within microseconds of the speed-of-light travel time isn't a useful service. It just doesn't have to be that close.