So how come they allow this front run bs?

Discussion in 'Trading' started by Nofear777, May 24, 2010.

  1. Example. I have bid at 3.16. Someone sells 3000 shares at 3.1602

    WTF is that? How do I put in sub penny order? I want to put my order at 3.1699.

    Is that possible?
    It doesnt seem to let me.
  2. I think it is called an "efficient market"
  3. Is the SEC working to ban this kind of crap? I thought I heard that somewhere.

    I just want a level playing field.
  4. Uno


    You don't deserve a playing field. When did you ever lift a finger to make sure SEC/Goldman/Government was playing fair.

    Let someone else do it eh lazy Americans :p
  5. Im lifting a finger now no?

    What can we do? Complain to a corrupt sec who is in bed with goldman to keep hft trading going?

    Why do you guys think the SEC is so hesitant to introduce a uptick rule? That would effectively halt alot of this HFT bullcarp.

    But guess what? That 1k drop would never have occured at that speed.

    Why do you think they dont abolish the subpenny rule all together?
    Because SEC gets nutted on their face by goldman and crew.

    The bottom line is volume. Because SEC knows ,as do all the ecns, that half our volume is bullsh*t algos that are trying to make .5 penny a trade.
  6. Uno is the resident 100+ alias 9yo psychopath. Ignore.
  7. Yep, confirmed. cold/c-kid.
  8. Occam


    This is due to "Broker/Dealer Internalization", "payment for order flow", and "dark pools", where such prices are allowed unfortunately due to their having been sort of grandfathered in. I disagree with some of the earlier, cynical posts; exchanges and the SEC are interested in combating these behaviors, although it's a battle.

    See the following:
  9. Article from Zerohedge written by Dennis Dick of Bright Trading, LLC:

    My firm, Bright Trading LLC, recently provided comments to the SEC concerning a predatory trading practice that is compromising the NBBO. It is the practice of using undisplayed trading centers to step in front of displayed orders by an infinitesimally small amount. Today I was trading a very thin, illiquid stock where these predatory trading practices run rampant. I decided to document the sequence of events.

    Time & Sales

    Time Last Share (100 lots) Exchange

    10:19:35 14.04 1 FINRA TRF

    10:19:48 14.04 1 FINRA TRF

    10:20:00 14.0399 1 FINRA TRF

    10:20:14 14.0399 1 FINRA TRF

    10:20:28 14.0399 1 FINRA TRF

    10:20:43 14.0299 1 FINRA TRF

    10:20:58 14.05 1 FINRA TRF

    10:21:15 14.0399 1 FINRA TRF

    10:21:31 14.0399 1 FINRA TRF

    10:21:49 14.0299 1 FINRA TRF

    10:22:06 14.0199 1 FINRA TRF

    10:22:22 14.05 1 FINRA TRF

    10:22:41 14.05 1 FINRA TRF

    10:23:00 14.0499 1 FINRA TRF

    10:23:18 14.05 1 FINRA TRF

    10:23:37 14.05 1 FINRA TRF

    10:23:57 14.05 1 FINRA TRF

    10:24:15 14.05 1 FINRA TRF

    10:24:36 14.05 1 FINRA TRF

    10:24:56 14.0299 1 FINRA TRF

    10:25:16 14.0299 1 FINRA TRF

    10:25:34 14.03 1 NYSE

    10:25:34 14.04 1 NYSE

    10:25:37 14.0399 1 FINRA TRF

    10:25:58 14.0299 1 FINRA TRF

    10:26:20 14.0299 1 FINRA TRF

    10:26:40 14.0199 1 FINRA TRF

    10:27:02 14.0199 1 FINRA TRF

    10:27:24 14.0299 1 FINRA TRF

    10:27:44 14.0299 1 FINRA TRF

    10:29:58 13.99 10 FINRA TRF

    Sequence of Events

    Time Event
    10:19:34 I place an order to sell my 300 shares of RBS.PRE at $14.05

    10:19:35 An algorithmic trader steps in front of my order at 14.04 (offering on NYSE exchange).

    10:19:35 The stock trades at 14.04. The displayed 14.04 offer is not filled as the quote remains the same, despite the stock trading at that price. The trade was reported on FINRA TRF (FINRA Trade Reporting Facility). This means it was traded off the exchange.

    10:19:48 Stock trades again at 14.04, reported on FINRA TRF, displayed offer is again not filled.

    10:20:00 Stock trades at 14.0399, in front of displayed offer of 14.04.

    10:20:14 Stock trades again at 14.0399, in front of displayed offer of 14.04.

    10:20:18 Stock trades for a third time at 14.0399. Displayed seller is again not filled.

    10:20:38 Frustrated, I move my ask price from 14.05 to 14.03. I am now the best offer.

    10:20:43 Stock trades at 14.0299 in front of my 14.03 offer.

    10:20:50 Frustrated, I cancel my order. The best displayed offer is now 14.05.

    10:20:58 Stock trades at 14.05, but the displayed offer is again not filled. Trade is reported on FINRA TRF (off exchange). The displayed offer moves down to 14.04.

    10:21:15 Stock trades at 14.0399 in front of displayed 14.04 offer.

    10:21:31 Stock trades again at 14.0399 in front of displayed 14.04 offer.

    10:21:41 I decide to try and offer my 300 shares again at 14.03.

    10:21:49 Stock trades at 14.0299 in front of my displayed 14.03 offer.

    10:21:55 Frustrated I move my offer down to 14.02.

    10:22:06 Trade goes off in front of me again at 14.0199.

    10:22:15 I move my offer back to 14.06. Another trader offers in front of me at 14.05.

    10:22:22 - 14.05 trades 7 times, and 14.0499 trades once, but displayed offer is not
    10:24:36 filled on any of these orders.

    10:24:44 I move my offer down to 14.04. Other trader immediately steps in front of me and offers stock at 14.03.

    10:24:56 and
    10:25:16 14.0299 prints twice, displayed offer not filled again.

    10:25:34 Displayed offer 14.03 gets filled, and I get filled on 100 shares at 14.04. Hallelujah!!

    10:25:37 14.0399 trades in front of my remaining 200 shares offered at 14.04. Another trader places sell order at 14.03.

    10:25:58 14.0299 trades in front of displayed 14.03 offer.

    10:26:20 14.0299 trades in front of displayed 14.03 offer again.

    10:26:39 I move my offer from 14.04 to 14.02.

    10:26:40 14.0199 trades in front of my displayed 14.02 offer.

    10:27:02 14.0199 trades in front of my displayed 14.02 offer again.

    10:27:10 I move my offer back to 14.03.

    10:27:24 14.0299 trades in front of my displayed 14.03 offer.

    10:27:44 14.0299 trades in front of my displayed 14.03 offer again.

    10:27:50 I give up and move onto another trade. Later I am filled at 14.03, and the stock proceeds to go higher (only reason I am filled).

    Who is this market participant stepping in front of my displayed offer? Who is this market participant intercepting the buy orders that are trying to take my displayed offer? Who is this market participant forcing me to pay the spread and hit the bid below? According to the implied exemption given under SEC rule 612, the only market participants capable of trading in sub-pennies are broker-dealers, to offer price improvement. Is this $0.0001 price improvement justification for compromising the displayed quote? This isn’t an isolated event, these events happen continuously every day in this two-tiered market structure. This is a crime of epic proportions, and our regulators need to deal with this immediately.
  10. That's not all - the SEC may NEVER "find out" what was behind the May 6th crash...

    U.S. regulators may never know what caused the recent market crash and still have not found evidence trading errors or system malfunctions triggered the brief free fall, top futures markets regulators said on Monday.

    More than two weeks after the Dow Jones Industrial average lost nearly 700 points in minutes before recovering, regulators and exchange operators are still searching for answers.

    Which means - it WILL happen again...

    Mary Schapiro is really good at regulating what she doesn't know.
    #10     May 24, 2010