Consolidated Audit Trail Costs May Hit HFT Hardest

The proposed changes are expected to hit high-frequency trading firms hardest. That’s because costs of the consolidated audit trail, or CAT, would be spread across all firms in the national market system, as well as waves of orders sent to exchanges by high-speed automated trading systems.

“Historically, with a lot of the NMS plans, trades have been how you allocate costs among markets. And I think one of the issues we’re going to be dealing with is, given the nature of CAT,” is cost allocation, said Thomas Gira, Executive Vice President for Market Regulation at the Financial Industry Regulatory Authority.

High-frequency traders are know for placing thousands of orders, then canceling most of them before making a single trade. Because exchanges bear the burden of these orders in the form of storage and retrieval costs, a more blended cost allocation method must involve high frequency traders taking on part of that burden.

http://www.cftclaw.com/2012/05/proposed-consolidated-audit-trail-impact-highfrequency-traders/

 

I can't wait. This plus the Volcker Rule. Thank God JPM lost $2billion cause it strips any credibility away from opposing arguments. I got nothing personal against HFT's, just my wallet dose. Trading was easier before. Bring back the 1/8 tick as well. I can dream.

 

Bringing back fractions would be great but it is never going to happen---need for speed and all. Charging HFT's and dark pools fees for audit trail and transaction fees is a good start to cleaning up this mess we call the marketplace.

 

I know fractions will never cone back. Simply just reminiscing about the days beforw hfts and dark pools. When the specialist did most of the volume. much easier to buy his prints vs fishing dark pools for liquidity.

 

Don´t remember where, but last month I´ve seen a SEC paper talking about the possibility of going back to fractions for cheap stocks.

But overall the situation is slowly changing for good, fees for canceled orders, volker, the audit trail . We just need one more mini flash crash or failed IPO and the world will be ours again .

 

I read that too. They argue that liquidity in small cap stocks has dramatically diminished with decimal spreads. That bringing back fractions will incentivise market makers to come back to those stocks. They are conducting a study right now on the matter.

 

I guess what I don't understand is why market makers don't just sit there with wide spreads right now as it is. Why do we have to maintain an artificially wide spread?

 

There is a lot of other traders (hft, scalpers, rebaters) that will frontrun their orders until it comes to the min. 1c. That limits the profit of everyone, in case of the fractions, the min. spread would be wider and more profitable to trade.

 

theses stupid assholes at the sec are going to pay 4 billion for a computer and say it costs 2 billion a year to run?

hahaha, it cost less to send a man to the moon.


what kind of scam is this exactly? and what exactly are these morons going to do with a consolidated audit trail?? i mean, what is the point. this is so beyond stupid hopefully romney puts a stop to this idiot money grab. this has nothing to do with an audit trail, its simply a way to increase their budge 3 fold. its sickening.

 

That's ridiculous. Where did the two extra zeros come from? It's not THAT much data to be shuffling around.