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Wall Street is Unethical

2&2 Slider To Leyritz said:
HFTs are not affecting the vast, vast majority of participants in the US economy. They are gaming a system that's whole purpose is to reward those who game it the best. Kudos to them.
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2&2 Slider To Leyritz said:
Not really. The pension funds are paying what they believe is the fair value for the stock share. If they cared about the fraction of the cent, then they can set their price that fraction lower.
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And fleecing pension funds doesn't affect the vast majority of Americans participating in the US economy?
 
Kinda like how stock prices magically go up or down before some big news is announced. How does that not result in insider trading every time?
 
ONW said:
They have a millisecond to resubmit their order.
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Just found this video explaining how the HFT rigging is being accomplished. This video makes it a little easier to understand.

 
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ImTheCaptain said:
no, they can't
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Sure they can. If they think a stock is worth $28.09, then they submit their buy limit order at that price. If they think a stock is worth $28.08, then they submit their buy limit order at that price. They are getting it for the value they think it is worth; the fact that someone is jumping in the middle to capture a fraction of a cent below what they are setting their price at doesn't change that they are buying it at what they think it is worth.

If it is a purely market purchase, then they are risking the market flux, which is why they are getting in the market to begin with. They can't seek the upside but complain about the downside. That's bullshit, they can buy a faster computer if they want to hedge against the risk that they themselves are trying to benefit from.
 
HFT Rigging sounds like it is intentionally manipulating the market which is not what we have a market for. Definitely sounds like an item that should be regulated against. We don't have a stock market so that investors can develop cheat codes. This isn't Nintendo. It is supposed to be a foundational element for our economic well being. I don't see how someone tricking the market is a positive for our economy or playing within the intended purpose of the market in the first place. Conservatives should be more level headed about things like this that look, smell, and act subversive. It seems like an obvious manipulation of the market, and that should never be an allowed method for establishing the value of business.
 
So what is the solution, Wrangor? There are clear incentives to cheat, so how does the market install disincentives?
 
I am not technically savvy enough or close enough to situation to feel comfortable with any of my suggestions, but I would think this would be pretty easy to track this kind of activity on a large scale though. Couldn't you just treat it like we do inside trading? In order to accomplish this you are going to have to use a pretty sophisticated tech setup and buy/sell in volume. You could also just heavily tax day trading to the point where this day trading becomes almost completely obsolete. Day trading isn't a positive force in the market anyway, it is basically legalized gambling. You could just tax the piss out of day traders, and as a trade off lower capital gains on long term investments.

The market seems to work best when investors play the long game. So encourage that activity and at the same time establish some strong negative consequences to gaming the system. I eagerly await someone with more savvy pointing out the faults in that philosophy (I am sure I am missing a pretty simple concept that destroys my paradigm).
 
Wrangor said:
I am not technically savvy enough or close enough to situation to feel comfortable with any of my suggestions, but I would think this would be pretty easy to track this kind of activity on a large scale though. Couldn't you just treat it like we do inside trading? In order to accomplish this you are going to have to use a pretty sophisticated tech setup and buy/sell in volume. You could also just heavily tax day trading to the point where this day trading becomes almost completely obsolete. Day trading isn't a positive force in the market anyway, it is basically legalized gambling. You could just tax the piss out of day traders, and as a trade off lower capital gains on long term investments.

The market seems to work best when investors play the long game. So encourage that activity and at the same time establish some strong negative consequences to gaming the system. I eagerly await someone with more savvy pointing out the faults in that philosophy (I am sure I am missing a pretty simple concept that destroys my paradigm).
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Most people who are concerned about this would go along with the basics of what you're saying, usually in the form of a financial transactions tax. A long term buy and holder doesn't get impacted much, the HFTs get killed by such a tax (especially if you go one step forward and make it progressively escalate by frequency of transaction).
 
Right, but that type of tax would also hit the pension and hedge and mutual funds that "legitimately" play the markets on a daily basis, and who you are purportedly trying to protect from HFTs. I'm sure they would gladly give up the fraction of a cent that the HFTs are "taking" from them in lieu of paying an additional 2% or 3% trading tax. That would have a huge negative impact on people's portfolios relative to the money lost through the HFT transactions.

You would have to somehow tie the tax to the actual timing of ownership - like taxing positions that are held for less than a minute. But I don't know how the IRS would keep up with that at all, they are still running computer systems from the 90s.
 
meh, nevermind.

i don't really have a big problem with the HFT guys but I see why people get fired up
 
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2&2 Slider To Leyritz said:
Right, but that type of tax would also hit the pension and hedge and mutual funds that "legitimately" play the markets on a daily basis, and who you are purportedly trying to protect from HFTs. I'm sure they would gladly give up the fraction of a cent that the HFTs are "taking" from them in lieu of paying an additional 2% or 3% trading tax. That would have a huge negative impact on people's portfolios relative to the money lost through the HFT transactions.

You would have to somehow tie the tax to the actual timing of ownership - like taxing positions that are held for less than a minute. But I don't know how the IRS would keep up with that at all, they are still running computer systems from the 90s.
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Now that is a great thought. Long, short, and tremendously short capital gains taxed at different rates.

I don't think pension funds change positions on a daily basis, but not allowing HFT during "relabalancing" periods might also help. I don't know how you'd do it.

"Most retirement savings, such as private pension funds or 401(k) and individual retirement accounts in the US, are invested in mutual funds, the most popular of which are index funds which must periodically "rebalance" or adjust their portfolio to match the new prices and market capitalization of the underlying securities in the stock or other index that they track.[64][65] This allows algorithmic traders (80% of the trades of whom involve the top 20% most popular securities[64]) to anticipate and trade ahead of stock price movements caused by mutual fund rebalancing, making a profit on advance knowledge of the large institutional block orders.[22][66] This results in profits transferred from investors to algorithmic traders, estimated to be at least 21 to 28 basis points annually for S&P 500 index funds, and at least 38 to 77 basis points per year for Russell 2000 funds.[23] John Montgomery of Bridgeway Capital Management says that the resulting "poor investor returns" from trading ahead of mutual funds is "the elephant in the room" that "shockingly, people are not talking about."[24]"
 
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JuiceCrewAllStar said:
Capitalism has also been the death of millions of people, an environmental disaster, and ripped apart the cultural fabric of most every nation.
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Easily the most absurd statement I have had the pleasure of reading today on the tunnels. The amount of lives saved and enhanced by capitalism is impossible to calculate. Take away capitalism in one great movement and the starvation and violence that would occur would be staggering. Feeding the population of the planet would be an impossibility without capitalism.
 
Seems to me that most people get salty about high frequency trading bc people get rich as shit from it and it sounds relatively simple
 
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