I have been posting about CFTC potential trading limits on futures.
tradersutra.blogspot.com/2009/07/trading-limits-under-review-by-cftc.html
tradersutra.blogspot.com/2009/08/crude-jokes-indeed.html
tradersutra.blogspot.com/2009/07/crude-oil-speculation.html
I am quite confident that this is the latest dog and pony show in front of congress.
These guys at the CTFC are all former Wall Street fraud enablers. Why would they set limits on futures trading? Why bite the hand that feeds you?
Well today....a high ranking official at the CTFC Mike Dunn, expressed concerns that the agency does not have the powers or resources it truly needs to rein in excessive speculation.
"After listening to all the panelists and reading all the written statements and background materials, it is clear to me that the CFTC does not have the authority to set speculative position limits in all of the venues that may be affected by excessive speculation."
More specifically- "troubled by the fact the CFTC cannot set limits for most over-the-counter derivatives or on contracts offered by foreign boards of trade, and he said it is imperative Congress acts to grant the CFTC the authority it needs."
Congress? Why does Congress have to be involved in everything? Why even have a CTFC? Why does Gensler and Dunn have high ranking jobs at a impotent agency?
More fluff from Mr. Dunn- "he would be "remiss" in his duties not to point out that many of the things advocated at the hearings could make it hard for the CFTC to implement given its staffing and resource levels." "Adopting a course of action by the commission without the monetary and human capital needed to successfully complete the mission would be perpetuating a cruel hoax on the public and all interested parties." So paying $4/Gallon at the pump is not cruel enough?
When they want to set rules enabling Wall Street to run up energy prices, no specific action by Congress is needed, yet when to "roll back" the same exemptions?
The only way these regulations are going to be enacted is if Americans stand up to their public servants. Demand accountability and ownership.
Wait! They will get to that when the Lost-Season Finale has been Tivo'd.
What are all the bulge brackets - Specifically Goldman going to do when all their High Frequency desks have to be shut down by the SEC.
ReplyDeleteBanning flash trades is going to be a big hit to most of the major banks that spent millions on the technology/staff to make up these complex algos for their high frequency desks. Should we just start shorting the banks now since there will be no way in hell they can continue raking in as much revenue as they are without this type of trading. I foresee in the very near future (think Q4) that banks will severely miss to the low side analyst estimates on their earnings if this happens. I do not believe they will be able to accurately pinpoint just how much this will hurt some of the shops that count on this type of revenue.
To be fair, I could be completely wrong but I think it is a topic worth discussing further. Thoughts?
Theres no reason for the NYSE to promote this kind of turnover. You need these kinds of rebate shenanigans in emerging markets and with fledgling exchanges, not the biggest name in the largest market in human history. Sadly, this makes money for everyone involved so it will continue until someone in government gets a clue (Eliot Spitzer, where have you gone?) and campaigns against it, at which point it will be defended as "good for America" and "detrimental to open markets".
ReplyDeleteYoungApprentice- Thanks for the comments. The SEC is never going to ban HFT programs. Its just too big for Wall Street. Remember the SEC basically is Wall Street. Things might change under Mary Shapiro who like Sheila Blair looks to be the only ones who know whats going on. I don't think we needed a black president, although I greatly admire Obama, what we need is a Woman President, because they are truly the only pragmatic people left in the world. I am just not saying that because I need to get some, but its the truth at the moment. The Flash Order system def needs to be addressed and it will be, but don't expect major changes.
ReplyDeleteThere is too much money and the fact that HFT has inflated the market and equity prices wont curry bad sentiment. We need a major market correction, which we will get to see how the HFT programs kill investors. No one cares when markets go up, when they go down its another story
RZ...What you is very true on the surface. But the NYSE is a public company, as such they are in the business of shenanigans. The specialist model is dead. The hybrid model is currently in focus, but that will change to 100% Electronic Model..which is ARCA. This is bad news for investors. The entire 1987 crash was brought upon by:
ReplyDelete1-Portfolio Insurance gone haywire
2-Program Trading
We are headed for a huge meltdown sometime in Sept/Oct.
Sometime in November/December we will have some congressional inquiries about HFT/Flash Orders/Rebates....yes after every one has gotten drilled and Wall Street Bonus Money has been planned out.