About Sub-Pennying - High Fequency Trading

Discussion in 'Trading' started by ASusilovic, Jan 8, 2010.

  1. Dark Pools Being Used to Step in
    Front of the NBBO.

    Presented by:
    Dennis Dick, CFA
    Trader Member of Bright Trading LLC
    Email: 4CJG@brighttrading.net
    Phone: Will provide through email

    Proposal to Review SEC Rule 612:
    The Sub Penny Rule
    SEC rule 612 was implemented to protect the
    integrity of the NBBO (National Best Bid and
    Offer). It has come to our attention that the rule
    needs to be reexamined and opened up once
    more for public comment. It is our belief that
    Broker-Dealers and Algorithmic programs (also
    known as High Frequency Traders) are
    circumventing the current rule by stepping
    ahead of the NBBO through the use of dark
    pools and in-house trading.


    Must read.
  2. gaj


    thank goodness.

    i have no problem with subpennying.

    i have a HUGE problem when i'm not allowed to do it, and my bid or offer sits there vacant while getting 1/100'd away.

    good luck with this, but i'm not holding my breath.
  3. Citation from the said investigation document/slide (p.19) :
    A Multi-Billion Dollar Scandal!!

    Estimate of Sub-Penny Volume and Estimated Profit:
    $73,500/day x 250 trading days/year:
    = $18,375,000/year in one stock!!
    Now imagine that there are over 2700 stocks listed on the NYSE alone.
    Many of these stocks have larger bid-ask spreads. The larger the spread the more profit potential.
    The numbers quickly become mind-boggling.
    This is a Multi-Billion Dollar Scandal!!!
    You are the Victim!

    I would say the SEC is a useless organisation, it's working for such gangsters, not for the public.
  4. but apparently every trader on ET is raking in big bucks in this mkt, so no one gives a shit. Cool eh???:D
  5. Interesting,

    thank you for sharing. Seems to me with the SECs vast powers to observe trading activity, they should easily be able to spot sub-penny front running on an automated scale, no?
  6. I'm sure they are. Not from trading mind you, but from their usual trade of mens room attendant.
  7. mf's have been doing that shaving crap for years now. They made their billions.
  8. placing blame on algorithmic trading or high frequency trading is going to do more damage to this industry than good. why place blame on traders? what's mr' dicks agenda? if sub-pennying is the issue then focus on that. this continued demonization of high frequency trading has heavily influenced legislation like the transaction tax whose hope are to curb 'excessive' short term speculation (ie HFT).

    if you're going to place blame, place blame on the dark pools and broker dealers who offer these tools to their clients. blaming the trader will only hurt our industry. hugely suprised bright sponsors this.
  9. timcar


    Hopefully Congress will pass that Traders Tax this year (2010).

    If they do just imagine how much those Algorithmic programs and High Frequency Traders will pay. With all that fast trading those guys do, the tax they will pay should pay for the War.
  10. RedDuke


    Are you an idiot? This will put almost everyone out of business, and the biggest shops will get some kind of exemption.

    Do you even trade?
    #10     Jan 12, 2010