movie about HFT traders

Discussion in 'Educational Resources' started by zdreg, Mar 15, 2019.

  1. zdreg

    zdreg

    By
    Alexander Osipovich and
    Ira Iosebashvili
    March 15, 2019 2:13 p.m. ET

    Doctors, lawyers, soldiers and even journalists have all seen movies made about their professions—then gone on to complain about how Hollywood got it wrong.

    Now high-frequency traders will have their turn. And they can’t wait.

    “The Hummingbird Project,” released in theaters Friday, stars Jesse Eisenberg as a trader who embarks on a secretive plan to lay a fiber-optic cable linking the New York Stock Exchange to the fictional Kansas Electronic Exchange, so he and his partners can make millions of dollars by zipping stock orders between the two markets’ computer systems.

    The movie has been causing a buzz in trading circles since a trailer was released onlineearlier this year.

    [​IMG]
    Ready for my close-up
    “Admit it! We’re all secretly looking forward to this movie,” Richard Johnson, an analyst with Greenwich Associates who researches electronic trading, said in a tweet last month.

    Reached by phone on Thursday, Mr. Johnson said he and his colleagues were discussing a team outing to see the movie, although he added: “I’m sure it’s 98% fiction.”

    High-frequency traders use powerful computers and lightning-fast technology to buy and sell shares in the blink of an eye. By some estimates they account for around half the trading activity in the U.S. stock market.

    Kirsten Wegner, chief executive of Modern Markets Initiative, a lobbying group for high-speed trading firms, said she was “fascinated to finally see a movie about our industry”—even as she rejected its depiction of trading strategies. “It’s a very sensationalized, fictionalized account of high-frequency trading,” she said.

    In the movie, Mr. Eisenberg’s character faces obstacles including the Appalachian Mountains, a group of Amish farmers who refuse to sell him drilling rights, and a villainous high-speed trading executive played by Salma Hayek who tries to thwart his plan.

    Salma Hayek plays a villainous high-speed trading executive in ‘The Hummingbird Project.’ PHOTO: THE ORCHARD
    The plot mirrors the true story of fiber-optic venture Spread Networks, which completed a similar, ultrafast link from the Chicago area to New Jersey in 2010. The company was sold last year to telecom company Zayo Group Holdings Inc. Zayo wasn’t immediately available for comment.

    Real-life traders say “The Hummingbird Project” gets it wrong in key ways. Their main complaint: the film appears to promote the idea that high-frequency traders harm ordinary investors by front-running their orders.

    “The most annoying thing about the movie was the front-running allegation, which is totally false,” said Manoj Narang, chief executive of MANA Partners LLC, a New York-based quantitative hedge fund that does high-speed trading alongside other strategies.

    The industry was already feeling under siege by Washington. Democrats on Capitol Hill earlier this month renewed an effort to curb high-frequency trading by imposing a tax on financial transactions, a plan bitterly opposed by electronic traders and many on Wall Street.

    Manoj Narang, founder and chief executive officer of MANA Partners LLC. PHOTO:MICHAEL NAGLE/BLOOMBERG NEWS
    Michael Friedman, a movie buff and lawyer who has worked for electronic trading firms, saw “The Hummingbird Project” at an advance press screening in New York. With its focus on drilling for the cable, the film reminded him of technology-centric movies like “Apollo 13” or “The Martian,” but about traders instead of space travelers, he said.

    “Instead of the goal being saving the lives of astronauts everyone likes, the goal is making a lot of money for some Russians nobody likes,” Mr. Friedman said in an email.


    In the movie, Mr. Eisenberg’s character and his cousin, a genius computer programmer played by Alexander Skarsgard, come from Russian immigrant backgrounds.


    The title is a reference to the time it takes a hummingbird to flap its wings, measured in milliseconds, or thousands of a second. Mr. Eisenberg’s character is driven nearly to madness by the goal of laying a cable that transmits stock orders back and forth in just 16 milliseconds.

    “People don’t understand high-frequency trading...and they tend to be scared of things they don’t understand,” said Ron Klipstein, global head of electronic FX trading at Northern Trust Capital Markets. “There are no overnight successes. People work very hard to put together these systems.”

    “Am I seeing the movie? Yes, of course,” he said.

    In an interview, writer and director Kim Nguyen said he was inspired to make “The Hummingbird Project” by reading about the efforts of high-speed traders to shave milliseconds off the time needed to execute trades—a surreal and ultimately futile effort, he said.

    “We have captured so many great brains and the best talent available and are using them to shave nanoseconds, instead of finding answers for climate change and hunger in the world. It’s one of the saddest things,” he said.

    Michael Mando, Jesse Eisenberg, Sarah Goldberg and writer/director Kim Nguyen attend a screening of ‘The Hummingbird Project’ in New York. PHOTO: JAMIE MCCARTHY/GETTY IMAGES
    High-frequency trading is “chipping away at our dollars, and we’re not really aware of it,” he added.

    High-frequency traders reject such characterizations. They say they actually benefit investors by acting as middlemen, constantly buying and selling shares, which allows others in the marketplace to get trades done.


    Mr. Nguyen said the film isn’t taking a position on high-speed trading but illustrates “a realistic practice in the industry.”

    “The film is a work of fiction with fictitious characters and strategies,” he said in an email.

    Mr. Nguyen has no financial background, and his past films include “War Witch,” a drama about an African child soldier that was nominated for an Oscar for Best Foreign Language Film. He sought to add realism to his new movie by working with Haim Bodek, a former high-frequency trader and whistleblower, whose complaints have led to Securities and Exchange Commission penalties against stock exchanges.

    Haim Bodek, a former high-frequency trader and whistleblower, worked with the director. PHOTO:JESSE NEIDER FOR THE WALL STREET JOURNAL
    Mr. Bodek said traders would find fault with some aspects of “The Hummingbird Project.” But he defended the movie, saying the filmmakers took liberties to make a more compelling plot.

    “Storytelling basically bends the rules of every industry," Mr. Bodek said. “This is not an academic paper.”

    Many high-speed traders are still bitter about their depiction in author Michael Lewis’s 2014 best-seller “Flash Boys” which prompted hearings in Congress and widespread criticism of ultrafast trading.

    Christina Qi, co-founder and partner at Domeyard LP, a hedge fund that focuses on high-frequency trading, plans to see the new film. “It’s just weird to me that someone would make this movie,” she said. “My industry is so niche.”

    Like other high-frequency traders, she believes the industry has gotten a bad rap. “I’d go to conferences and people would raise their hands and say ‘You’re evil,’ ” she said. “People think we sit around the office all day, tweaking hardware, trying to get faster.’”

    At the same time, publicity for the industry doesn’t necessarily have to be a bad thing. “It’s a movie about us, finally,” she said. “We have the spotlight. That’s exciting.”

    Write to Alexander Osipovich at alexander.osipovich@dowjones.com and Ira Iosebashvili at ira.iosebashvili@wsj.com
     
    tommcginnis and CSEtrader like this.
  2. Overnight

    Overnight

    And that is where the bullshit seeps through and proves the point. By that very statement.

    You HFTs are not doing this for some magnaminous and lofty goal such as providing liquidity and good executions for "the people"...Yer doing it to MAKE MONEY.

    After all, there was no HFT 20, 30 years ago, and shit worked just fine back then. So why are you guys relevant now? You aren't. You're just exploiting a system. It is plain as day. If you were NOT making money, why would you spend millions of dollars to move a microwave antenna 20 feet closer to the CME tower?

    Fucking morons.
     
    s0mmi, comagnum and S2007S like this.
  3. sle

    sle

    It did not work fine then either, specialists were there rip you off even worse.
     
    T0pH4t, MoreLeverage and zdreg like this.
  4. Overnight

    Overnight

    So when did it ever work fine? Did it work fine in the 1950s? the 1940s? Did it ever work, or were there always specialists there to rip everyone off?

    Sle, you are giving validation to the HFTs here...
     
  5. I`m [secretly] looking forward
     
    CSEtrader likes this.
  6. ElCubano

    ElCubano

    With huge spreads.
     
  7. sle

    sle

    Yup, and if anything, it was worse as they had a lot of structural advantages and there was not technological way to get around them. At least now we have all sorts of stuff to improve execution despite the lack of speed - stuff like Intelligent Cross, dark pools etc.

    There is nothing inherently bad about trading fast. However, the faster players are incentivized to game the system, primarily by the way they whole market is shaped (by exchanges and regulations).

    To FFT, that is? It's not gonna get rid of HFTs, if anything they will have even more advantage. Look at various countries that have the stamp duty or T-tax - HFTs are very active there.
     
  8. zdreg

    zdreg

    the spreads are much narrower with the presence of HFT traders. complainers are whining, while looking for excuses and offering laments about their trading performance.
     
    DepthTrade and MoreLeverage like this.
  9. Overnight

    Overnight

    So, you were there, trading in the 1940s and 1950s? You have seen this first-hand?
     
  10. zdreg

    zdreg

    commissions were 10X higher in the 1940s and 1950s. negotiated rates started in 1975 and were much higher than current rates.
     
    #10     Mar 15, 2019