Discussion in 'Wall St. News' started by seasideheights, Apr 14, 2010.
Large Trader Reporting System
I think the sec should just use the honor system. If there is unusual volatility, firms could just phone in and say "Yo, that was us". I've seen this method work on Yahoo, some trade will go bonkers and people own up.
Its a great idea the SEC has. Lets limit volume on the exchanges. Nothing like a drop in liquidity to move stocks higher.
SEC is like the DEA, very very dangerous
This has huge ramifications for these reasons:
1. This would allow the government to know exactly at all times how much money is required to control the markets. This was probably why the PPT failed to contain the 08 selloff. This is the biggest step to permanent manipulation by the US government.
2. The government (and the people in the position to get access to that information...read the very wealthy with connections to government officials) would have at all times a complete snapshot of who could move the market and what their positions are, and how they trade.
3. The bureaucracy of success. There would be a cap on how large you can trade before additional paperwork and reporting requirements kick in. Once you reach that threshold, you have no idea how government monitoring of your positions will affect your success.
4. The government can and would trade against large players. If the government needs cash guess where they go? They have unlimited funds no one else does. How easy would it be to write a computer program to steal money from people with money? For those who write code...not that hard.
5. Moral issue. Should any one person or group of people government or not, have access to how private citizens are deploying capital in the markets? Should they (and invidividuals in power) have information like this that no one else does? Even if you break your accounts up into smaller chunks the government wants to know about all of them and track every move the day after. Is this fair? Do you believe that this information cannot and would not be seriously abused?
The bottom line is that this is about most Orwellian maneuver the administration has proposed in the aftermath of the subprime crash. It allows the government to track every move, monitor and analyze every traders position of reasonable size and decide who lives and who dies. 10mil a day for a day trader esp. a prop trader is not that large esp. as stocks get more expensive and lose volatility. The govnmnt wants to make it sound like this legislation is reserved for banks and hedge funds when really it can affect successful day traders too.
Individuals run the government and the government is not immune to corruption and abuse. This kind of information could easily trickle down to the darker cracks of the government and the, shall we say, ethically challenged that lurk in those shadows waiting to prey on whatever falls to them. If you don't believe this can happen, all you have to do is look at the allegations of insider trading info passing at GS. It would be easy to abuse this kind of information and for groups or individuals with connections to the government officials this information this has the potential to be the holy grail of making money.
Moreover, this does nothing to solve the real problem---mismanagement and failure by politicians to steward the economy. If they had done their job better in 07, we could have avoided much of the subprime fallout in the markets. Are you tired of government using crises as public whipping stick to pass their extremist agenda? Exactly where are these large traders on declining volume and anemic volatility the government says this legislation is needed to control?
Trying to over-micromanage the markets is not the answer to avoiding another subprime mess but it sure makes it easy to get any information on what traders are doing, how well they are doing (who is winning and making money) and what they need to do control US markets (and those individuals) and potentially take money from people who have it by trading against them.
Is this the kind of stock market you want? Would you like a market that runs more on political agendas and manipulation rather than the realities of business and human emotion? If you believe the markets didn't work well before the current administration then perhaps you should support this legislation. If you're tired of the government using subprime to take more and more of your freedom then perhaps you should be concerned about this. Either way, you should let your local government official know how you feel because this little piece of legislation has the power to change the US markets forever and make it more difficult to succeed.
Further, information to identify the large trader customer can provide valuable information to permit the Commission to track large trader activity across markets and through various broker-dealers. The ability to track and analyze this information would facilitate the Commissionâs efforts both to investigate potential manipulative activity and to reconstruct a more accurate market history and would be particularly useful when analyzing information on large traders, as some large traders may trade through multiple accounts at multiple broker-dealers and may trade using sponsored access.
In light of recent turbulent markets and the increasing sophistication and trading capacity of large traders, the Commission needs to enhance further its ability to collect and analyze trading information more efficiently, especially with respect to the most active market participants. In particular, the Commission needs a mechanism to reliably identify large traders, and promptly and efficiently obtain their trading information on a market-wide basis.
I see a lot of blabbering about how it needs to grow its tenticles, but no attempt at a justification, except some vague references to "market manipulation". Considering the effort that is gone into preparing this proposal, one would imagine they could have come up with a plausible, if not convincing, justification.
The intent of this proposed provision is to push the identification requirement up the corporate hierarchy to the parent entity to identify the primary institutions that conduct a large trading business.
Hmm. I wonder if there are easier ways to do this....
The Commission is concerned that excluding foreign large
traders from the proposed ruleâs requirements could create a competitive disparity between domestic markets and persons and foreign markets and persons. In particular, including foreign large traders within the scope of the proposed rule would provide the Commission with information on entities contemplated by the statute that trade substantial amounts of NMS securities regardless of their legal domicile and would subject all such entities equally to the self-identification and filing requirements that the Commission is proposing herein.
More of "tell Uncle Sam about who you are and what you own" directed at those wishing to invest in America. Make foreign investment too expensive (in terms of paperwork, effort, lawsuit risk, Madoff risk, etc) and watch the substaintial capital inflows reverse and go elsewhere. Win win!
They have a section soliciting comment, with some suggestions:
Should the LTID number be structured in any particular manner? For example, should the LTID number be structured so that it discloses both the identity of the parent company and the actual legal entity that effects the trade? Should the LTID number be designed to be âextensibleâ so that it could be expanded for use in recording aggregated equity and equity option position (as opposed to trade) information, OTC derivatives trades, OTC derivatives positions, and different categories of trader (e.g., hedge fund, insurance company, pension plan), if tracking this information becomes required under applicable law?
Ahh. Here is the real intent. Not recording large trader activity and analysing it later, but expanding the tenticles of the state to include publishing information on what large positions you hold. As if this information will not be sold to the highest bidder or otherwise abused.
I have this horrible sinking feeling. After years of work and finally achieving something, I won't have a trading business in a couple of years. If the Tobin tax doesn't get it, I will be regulated out of existence by some perverse attempt at making a real life "Equalization of Opportunity Bill".
The race is on...can I do this for long enough to shut up shop and retire when they finally make it impossible? (hopefully somewhere decent where I can live a reclusive, semi-anonymous life away from idiots, politicans, and looters).
Goldman and Getco have been doing this for years.
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