How One Whistleblower Turned the Tables on High-Frequency Traders - News and Current Events | futures io social day trading
futures io futures trading


How One Whistleblower Turned the Tables on High-Frequency Traders
Updated: Views / Replies:169 / 0
Created: by kbit Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

How One Whistleblower Turned the Tables on High-Frequency Traders

  #1 (permalink)
Elite Member
Aurora, Il USA
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
 
kbit's Avatar
 
Posts: 5,872 since Nov 2010
Thanks: 3,301 given, 3,332 received

How One Whistleblower Turned the Tables on High-Frequency Traders

A once esoteric corner of the stock market —- “order types” —- has taken center stage the past few years in the debate about the health of the market, the role of high-speed traders in it and how stock exchanges interact with clients.

A big reason for the scrutiny: Order types in many ways stand at the boundary between exchanges and their trading clients. As such, they play a crucial role in how buy and sell orders are handled and can determine whether an order is successful or not.

But few realized how complicated, and how problematic, they had become until a former high-speed trader, Haim Bodek, decided to blow the whistle to regulators in 2011.

First, a quick primer. Order types are instructions traders use to tell an exchange how a buy or sell order should be handled by the exchange, such as whether the order should be executed immediately or wait until a stock reaches a certain price level. There are hundreds of variations of order types, and many have proliferated in recent years, adding to the market’s complexity.

Most investors, including many sophisticated traders, once believed that order types were relatively simple, giving them the ability to tell an exchange whether to execute an order immediately (a “market order) or to wait until a stock price hit a certain price limit (a “limit order”).

Then along came “Hide Not Slide.”

Hide Not Slide is an order type provided by Direct Edge, a computer-driven stock exchange now owned by BATS Global Investors. The Wall Street Journal reported late Tuesday that the Securities and Exchange Commission is in settlement talks with BATS, which merged with Direct Edge earlier this year, regarding Direct Edge order types, including Hide Not Slide.

Other exchanges provide similar order types (here’s how they work), and the SEC is also looking into them.

Mr. Bodek first encountered Hide Not Slide when he was running a high-speed trading outfit in Stamford, Conn., called Trading Machines, in the spring of 2009 — about the same time that Direct Edge first rolled out Hide Not Slide. Suddenly, his firm started taking big hits on its stock trades (Trading Machines largely specialized in options but also traded stocks). He didn’t know why, and neither did his traders. Later that year, Mr. Bodek says, a Direct Edge employee told him that his firm should stop using plain vanilla limit order and start using Hide Not Slide.

The conversation was a revelation. He realized that his firm had been losing out because it hadn’t been using an esoteric order type he’d heard little about. It made him wonder who else knew about it, and why. Were some firms getting special treatment from exchanges, while others were being victimized?

Mr. Bodek “became convinced exchanges were providing such an edge after he says he was offered one himself when he ran a high-speed trading firm—a way to place orders that can be filled ahead of others placed earlier,” a page-one Wall Street Journal story in September 2012 recounted.

Mr. Bodek eventually shut down Trading Machines. Then, in the summer of 2011, he approached the SEC and revealed his concerns about what he called “toxic” order types, such as Hide Not Slide, in a Dodd-Frank whistleblower complaint.

In the following years, as news emerged about Mr. Bodek’s concerns and a mounting SEC investigation, the industry’s awareness of order types exploded. And regulators are cracking down. SEC Chairman Mary Jo White said in a recent speech in New York that a source of concern for the agency is the “large number of order types offered by the exchanges, which have been a recent focus of the SEC examination program.” Ms. White said she has asked exchanges to conduct a comprehensive review of order types and “how they operate in practice.”

Such intense scrutiny might not have occurred if Mr. Bodek hadn’t drawn attention to the issue, experts say.

“None of this would have happened without him,” said Dave Lauer, a former high-speed trader and President of KOR Group LLC, which conducts market research. “Haim took a huge risk personally and professionally in exposing these issues and spent years pushing for action and devoting himself to it.”

How One Whistleblower Turned the Tables on High-Frequency Traders - MoneyBeat - WSJ

Reply With Quote
The following 2 users say Thank You to kbit for this post:

Reply



futures io > > > > How One Whistleblower Turned the Tables on High-Frequency Traders

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
CME Sued on Claims High-Frequency Traders Bought Access kbit News and Current Events 0 April 15th, 2014 10:10 PM
High-frequency traders can’t front-run anyone kbit News and Current Events 0 April 4th, 2014 11:10 PM
Tables turned as SEC watchdog comes under attack kbit News and Current Events 0 December 2nd, 2011 11:39 AM
High-Frequency Traders Descend onto Forex Markets kbit Currency Futures 24 September 16th, 2011 04:42 PM
High-Frequency Traders Elbow Aside Day Traders – What do you think about this? Arpad Traders Hideout 7 December 17th, 2010 11:42 PM


All times are GMT -4. The time now is 10:25 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-15 in 0.08 seconds with 19 queries on phoenix via your IP 54.221.76.68