Swift Trade in Reuters News

Discussion in 'Prop Firms' started by blackstormcap, Sep 7, 2011.

  1. (Reuters) - A brokerage that handled U.S. trading for Swift Trade, a now defunct "day trading" company accused this year of market abuses in Canada and Britain, may soon face regulatory charges in the United States.

    The Financial Industry Regulatory Authority, an independent U.S. brokerage regulator, on July 6 slapped a "Wells notice" on Biremis Corp, a broker-dealer that once handled Swift Trade's buy and sell orders and shares with it a Canadian parent company called BRMS Holdings.

    FINRA made a "preliminary determination to recommend that disciplinary action be brought against Biremis" for 45 separate rule violations from 2005 through 2010, according to the Wells notice reviewed by Reuters.

    Such notices advise recipients that charges could be forthcoming, and allow them to mount a defense.

    The notice comes as regulators globally focus on market manipulation, and puts a spotlight on the conduct of Biremis when it was a top-ten participant in the trading of securities listed on the New York Stock Exchange.

    It is unclear precisely which alleged violations are covered in the Wells notice, which simply lists a series of numbered rules related to broad topics.

    But these topics run the gamut, including trading ahead of customer orders and front running; margin requirements; the filing of misleading membership or registration information; anti-money laundering compliance; and a U.S. Securities and Exchange Commission emergency order on short selling.

    Swift Trade, which dissolved late last year, was a client of Biremis until May 2009, according to the Ontario Securities Commission (OSC). It had 4,500 traders globally including in China, India, Europe, Panama, and Russia, the OSC said in March.

    Though little known on Wall Street, Biremis was the third-largest liquidity provider for NYSE-listed stocks as recently as September 2006, and was in the top ten through most of 2007, according to Nasdaq's website.

    A woman who answered a call to a Toronto phone number listed for Biremis said the company declined to comment. Phone messages left at numbers listed for BRMS were not returned.

    A FINRA spokeswoman said on Wednesday the regulator does not discuss pending Wells notices.

    TROUBLES MOUNTING

    In March, the OSC accused Swift Trade of several significant breaches of securities law and "a culture of regulatory non-compliance" under Chief Executive Peter Beck, who is also the president of Biremis.

    Swift Trade ran a "high-volume, multi-national, securities day-trading business," having traded about 22 billion shares globally in 2008, the OSC said.

    Then last week, the UK Financial Services Authority (FSA) decided to fine Swift Trade $13 million for "systematically and deliberately" manipulating markets by "layering" large numbers of orders into the market to move stock prices, and then executing profitable trades on the other side before canceling the orders.

    Swift Trade appealed the FSA fine. Its OSC case is ongoing.

    Day traders are individuals, or retailers, who are very active and often short-term investors in securities markets. The FSA said Swift Trade's profits "were in excess of 1.75 million pounds," or about $2.79 million.

    Back in the United States, FINRA has made market manipulation a priority after the May 2010 "flash crash" rattled investors and amplified calls for a fairer marketplace.

    The regulator's enforcement and market regulation units both recommended disciplinary action on Biremis, according to the Wells notice, which was on FINRA's BrokerCheck website. The regulator also noted violations of nine exchange rules on behalf of operators Nasdaq OMX Group, NYSE Euronext and BATS Global Markets.

    Biremis has settled five FINRA charges in the last few years.

    (Reporting by Jonathan Spicer; Editing by Tim Dobbyn)
     
  2. LOL. Swifttrade no longer exists (as the article notes as well). Good luck with a lawsuit against it :) Peter (again) was one step ahead ...
     
  3. There is a difference between prop trading and retail trading- prop trading is fully backed by the company - retail requires a deposit
     
  4. i think this example is false? i thought the large non bona fide orders are entered below $10.10 (not 10.20 etc) to induce the market towards there


    The strategy both Finra and the FSA focused on is called layering. In an example of how it works, a trader might buy a small number of shares at $10 and place an order to sell them for $10.10 on an alternative trading venue, such as a dark pool. He also places a series of large orders to buy this same stock on an exchange for higher prices\$10.20, $10.30 and $10.40\"layering" on orders that create an impression of strong demand.
    When this apparent demand prompts other market participants to raise their "buy" orders to $10.10, the trader's "sell" order is executed and he instantly cancels his large buy orders, pocketing a 10-cent-a-share profit.

    http://online.wsj.com/article/SB10001424052702303933404577502841525759480.html
     

  5. Author has market logic incorrect. When price is at 10.00 and he has resting buy orders at 10.40, he would have been filled immediately at market ie at the ask. let's say 10.05. Now his strategy is to wait and till price moves up to his 10.10 resting sell order. I'm assuming the strategy involves fishing with bid and ask in dark pools.
     
  6. regulators gone buck wild
     
  7. Datradr

    Datradr

    RE: layering

    posting higher bids at 10:20 10.30 to get filled at 10:10 ? how would that work...if you get filled at 10.00 and the bid ask is 10- 10.10 and you post big size in an alternate exchange to bid at 10.20 or 10.30...you will get filled on your bids almost for sure. You are trying to get filled at 10.10 wile others can bail out higher right away. AM i missing something?
     
  8. thats why i asked if that article is false
     
  9. You are misinterpreting this, say a stock is bid 10.05 for 100 shares, and offered 10.06 for 100 shares, but i need to get out of a pile of shares.

    So if i wanted to layer bids i bid 10.04 for 10k shares 10.02 for 10k shares, and 10.00 for 10k shares.

    I have no intention of picking up any of those shares, but the stock goes up, because all of these people see these massive bids, sitting right behing the L1 bid. Now im offering the stock out and slowly selling it at the offer, and as soon as my sell is filled, i yank all my bids below which were causing people to buy the stock up.

    The funny thing is that this happens all the time, and it happens even more often with high frequency trading, but on a smaller level, i cant believe that anyone would actually complain about this when it is such a common occurence. Also if they complain about the fake bids, why dont they complain about the people who buy the shares based on the fake bids? I mean, their only intenion was to front run a big order, so why arent they the ass holes?
     
  10. Datradr

    Datradr

    ya layering-

    yes that makes more sense. That happens all day everyday...I am not sure how they prove you never intended to buy the shares if you cancel the order? it would be like trying to prove someone was going to commit murder because they had a gun.

    I am not saying there are not many many people guilty of this strategy....but proof and appearance are different things.

    I day traded for a while and that kind of manipulation goes on all the time, but if you pay attention u can usually tell whats real and whats not...especially if they get tested
     
    #10     Sep 18, 2013