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11/09/2012

Even the Angmohs are crying foul!



Finally the angmohs also cannot take it anymore and are crying foul. High frequency trading is no angel. And for all the goods they claimed to bring, they are really hogwash. High frequency trading is causing more harm and bringing nothing good to the stock markets around the world. They are the destroyers of stock markets and values of stocks. Many markets are appearing healthy with good volumes but in reality fictitious. Don’t believe anyone claiming that volumes are increasing because of high speed trading. It is a lie.

Kent Rossiter, head of regional Asia Pacific trading at RCM said, ‘You can look at the trading volumes and see it does a million shares a day. In reality, of the million shares you’re seeing, there’s not really a million shares out there for you to take, there’s probably 600k or 700k.’ I think he is too conservative. For a million trades done, very likely 80% are done by high frequency trading without any change of ownership, and creating a false market.

High speed trading doesn’t help liquidity: Fund Managers. This is the heading in an article in the ST today. The Bloomberg article said, ‘The benefits of high frequency trading in Asia are illusory and the strategies drive up costs, according to regional trading heads from JP Morgan Chase, Allianz Global Investors and Fidelity Worldwide Investment.’ It also reported that ‘the govts of HongKong, Singapore and Australia are considering the extent to which high frequency trading and other electronic strategies should be regulated’. They should not be regulated. They should be banned from any stock market.

The false claims that high frequency trading will provide liquidity, facilitate trades, market maker, and reducing cost are all bull. How could Asian govts be conned by such superficial claims when the damage of high frequency tradings have been the ire in US and Europe? The only clever govt is Singapore. In the last SGX AGM, when questioned, the management replied that they have not allowed high speed trading into the exchange. Thank God that this is true. I believe they are telling the truth.

High speed trading is violating all the rules and by laws of any stock exchange. It is unfair trading, cheating to be plain, when they are allowed to plug their computers into stock exchange system to monitor other trades and allowing their computers to initiate the best buy or sell to make a profit. As such they have emptied the pockets of many innocent traders and investors, including the funds and their clients.

Among the violations of high frequency trading are, churning, buying and selling with no change in ownership, cornering stocks or the market, creating a false market and unfair trading. No responsible stock market must allow such violations of their rules and by laws to go on, or they are simply accomplices to a crime.

The state of stock markets in the world is so bad that many are looking good superficially but are really in the intensive care wards. Like what George Yeo said, anything may look perfect on the outside, but don’t be deceived.

Govts across the world must not be deceived by high speed traders. They are not innocent and naïve little kids that brought their expensive computers to help a stock exchange to be market makers, to generate liquidity. The truth, they are out there to mop up everything in the market by unfair means. Responsible govts must stop the carnage caused by high speed trading and save their stock markets.

12 comments:

Ghost said...

It's a simple case of "be careful what you wish for". However I think you are giving the SGX too much credit. We don't allow HFT but we do have massive block trading which frankly isn't that much different. High volume shown on the screen but little liquidity in the markets.

Anonymous said...

The uncles and aunties are playing blackjack and roulette, some in Batam.

What do you expect ?

Anyway dont be too pre-occupied with HFT, its just a fad. The market is quiet for many other reasons. Dont jump to conclusions and suka suka assign blame.

Anonymous said...

Grand Uncle Matilah
will never agree with
your posting.

Chua Chin Leng aka redbean said...

Hi Ghost, welcome to the blog. I only wish that they were speaking the truth and my faith in them is not unwarranted.

But I always reserve a place to be called suckers or naive. What is the truth and are there really honest men telling lies?

Anonymous said...

Stock markets are just like any industry, it has up and down cycles.

Matilah_Singapura said...

Anyone is welcome to try to beat the software -- which can trade thousands of times per second. Good luck to you.

And good luck at trying to regulate this stuff. It is an "all or nothing" deal. I agree with the comment: no regulation, simply don't allow it.

..or as I said previously, ban humans from trading. Only allow machines.

But humans are the ones behind the machines. It is a "Battle of The Nerds and Geeks". And there is cheating going on too.Just like most derivatives, only very few people understand this new fancy financial smoke and mirrors...so therefore "classical" folks are caught off guard and can lose money until backside koyak.

Anyway, good luck to all the greedy fuckers. I'll bet on the Muay Thai fights at Lumpini Stadium. That serious ass kicking gets me hot, I have to go round the corner to Soi Cowboy to cool off.

Matilah_Singapura said...
This comment has been removed by the author.
Chua Chin Leng aka redbean said...

The damage caused by allowing computer trading is hundreds of times more than the toxic notes. The problem is that the victims could not find a way to nail this animal as it is sanctioned by the authorities.

The only bet is for the US govt to kill it and put a few regulators in Wall Street behind bars. Or let the Angmoh fund managers lose their pants and scream to for justice. They are starting to do it.

This is another Arab Spring waiting to happen in the finance industry. The govts have all been given notice that it is criminal to allow computer tradings to cheat on the innocents. They can't say they don't know. Caveat emptor will not be accepted. It is not fair game but cheating all the way.

Anonymous said...

Cant be too idealistic about goodness of the human species.
After thousands of years of horning their skills, crafty and vice arts, they are at their best now. Not practising their skills means the waste of their learning and not testing the validity of their knowledge.
Beanie got to learn from some of his enlightened conmenters. In fact pitching the art of wealth with them would be a more gainly sport for You, Mr Beanie.
Matilah will be a most worthy competitor to beat.
Spring is the best season, may it comes to everywhere dark and cold

Anonymous said...

Idealism in Sin is to accept the mantra that paying people millions to stop them from being corrupt is a wise thing to do.

'Pay me millions and I will not corrupt. Pay me millions and I will not corrupt. Pay me millions and I will not corrupt.'

Repeat this mantra three times a day, before breakfast, lunch and dinner. It is good for health.

Anonymous said...

Sure hi speed computer trading not in the stock exchange? What if someone lying?

Anonymous said...

High frequency "trading" is why the banks like Golden Sacks and "Jamie Perpetrator" Morgan can claim to make profits on every single day they trade.

Trading without the possibility of loss is not trading. It's called playing the game on a tilted playing field, just like the way the FAP government (and the GLCs it has set up to screw Sinkies out of their hard-earned money) like to roll.

To kill this socially useless "activity" of HFT, support a worldwide financial transactions tax (including a tax per 1000 quotes) and rules for every stock exchange that say every buy or sell quote must be advertised for at least one minute. Plus enforce all the existing rules against front running, churning and bait & switch quotes.