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 correspondence. 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. http://www.defendtrading.com/SubpennyinginDarkPoolsCompromisingNBBO.pdf Must read.
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.
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.
but apparently every trader on ET is raking in big bucks in this mkt, so no one gives a shit. Cool eh???
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?
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.
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.
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?