Computer trading - When Indians fear...do not tread

Below is a Bloomberg article on the danger of HFT and computer trading and how this new animal is frightening the Indians and their calls for actions to curb the beast. The only shortcoming is that there is this denial to call a crime a crime. But anyone in the business could figure out from the comments of the article how criminal are HFT and computer trading, how they cheated the innocent investors and how they are ruining the stock market from their gambling tactics instead of trading on stock fundamentals. As a result the stock market is in ruins and tatters. It is unbelieveable and criminal for stock market operators to continue with this destructive crime against the investors and the imminent destruction of the stock market industry. Here is the gist of the article with some of the irrelevant being deleted to shorten the piece.

Hottest Emerging Market for Algo Trades Wants to Cool Down (1)

By Santanu Chakraborty
     (Bloomberg) -- India’s flash boys are discovering that even the biggest emerging market for computerized trades has its limits.

In just five years, high-speed and algorithmic traders have gone from bit players to a dominant force on Indian exchanges, enabled by a technological arms race between the nation’s top exchanges that cut transaction times to tiny fractions of a second. Now, as some of the country’s largest brokerages call for tighter regulation, those same bourses are starting to explore whether speed traders should be reined in.

National Stock Exchange of India Ltd. is considering higher fees for traders who flood the market with unfilled orders, while its cross-town rival, the BSE Ltd., has called for “corrective action” to address the harmful side effects of high-speed strategies. Critics of India’s supercharged market structure say it’s raising costs for long-term investors, introducing little-understood risks and distracting exchanges from what should be a priority: getting more of India’s 1.25 billion people to put their savings to work in the country’s capital markets.

 “It seems that man is losing out against the machine,” said Jitendra Panda, a governing board member of the Brokers Forum, an association of 800 broker-dealers in India...

Both bourses have introduced co-location services -- allowing traders to put their computers in exchange data centers so they can execute faster -- and offered monetary incentives for derivatives transactions. India’s fragmented markets, where many of the same securities trade on multiple venues, also makes it attractive to high-frequency traders looking to arbitrage price differences. In October, the BSE reduced its average processing time for trades to 6 microseconds from 300 milliseconds, the fastest worldwide, according to Ashishkumar Chauhan, BSE’s chief executive officer.

While Chauhan says India has been among the world leaders in setting regulatory standards for high-speed trading, he sees scope for creating a more level playing field.

“We are doing a lot of HFT compared to the size of market and we need a clear understanding of the risk,” Chauhan said in an interview. “We need to take corrective action so that the good part of HFT is maintained and the harm that can come can be reduced to the maximum extent possible.”....

Exchange officials are quick to point out that their goal is to accommodate all types of investors and that computerized trading has brought important benefits to Indian markets, including smaller spreads and higher trading volumes.

But detractors claim that those measures don’t tell the whole story. They say some high-frequency traders are profiting unfairly at the expense of long-term investors by spotting their orders, then pushing up prices before the slower trader has time to react.

“Investors are being forced to pay more to buy or sell stocks due to HFT and algo systems,” said Panda....

The NSE is “continuously addressing concerns about different HFT models and their potential to distort markets,” Narasimhan said.

The Securities and Exchange Board of India, which issued broad guidelines on computerized trading in 2012 and 2013, said in December it’s considering new restrictions, but has so far taken no action....

For Deven Choksey, managing director of Mumbai-based K.R. Choksey Shares & Securities Ltd., India’s stock market would be better served if exchanges focused on attracting more of the nation’s growing pile of household savings instead of luring ever-faster traders and the higher fee income they bring. The base of individual investors has shrunk from about 30 million in 1991 to less than 25 million today, BSE’s Chauhan said.

“Exchanges won’t be able to help channelize household savings into the capital markets if their focus is only profit maximization,” Choksey said. “We will invite trouble if there’s no structural solution.”


Anonymous said...

How they cheated investors is an open secret. That is how 90% of the world's wealth ended up in the hands of 1% of the world's population.

As they say, if you cannot stand the heat, stay out of the kitchen. Why are they still in there to help the rich get richer? Greed, it is all greed and nothing but greed. Blame no one but look to yourself and you have the answer.

Ⓜatilah $ingapura⚠️ said...

@ idiot Bloomberg Indian

In typical Indian "panic-style", and through all the hot air blown thru in this piece of shit form Bloomberg, at least on part is true, although the whole truth was never revealed:

>> The Securities and Exchange Board of India, which issued broad guidelines on computerized trading in 2012 and 2013, said in December it’s considering new restrictions, but has so far taken no action....<<

See what this prick left out: the most obvious---WHY is this so?

Artificial Intelligence (AI) is hotter than the hottest Indian curry as a research area in India. The new HFT systems are going to be increasingly dependent on AI engines which have the ability to "learn and adapt". If you include genetic algo components, then the trading bots will have the characteristics of learn, adapt, EVOLVE.

There are many Indian physicists, mathematicians and computer and neuro scientists working in AI today. It's hot....boiling. And probably backed by govt as a lot of AI is being developed by and for the military.

HFT isn't going away. Indians might cry, but no difference will be made.

Virgo 49 said...

Sinkies worked hard honestly or otherwise for their monies.

But easily conned by these hyenas of other nationalities easily and too trusting as brought up by the too straight and unthinking system.

See they can invest millions in buying scraps of paper by the hai kow yee whites for land in foreign countries.

Buy shares of trading in wines and paid enormous sums as fitness club membership. Buy gold coins or bit the coins.

In the end, no sign no sound. Just simply closed down or declared bankruptcy.

Told to seek redress at what small claims tribunal. Go to George Street and kena pushed and shoved by the burly ang mohs sheepishly.

In the end just said bo pian, suay ah??

Lim Siak Suay.

Did the Government or MAS protect you with these unscrupulous businesses??

Just one word: Buyers Beaware.

Really chiam

Ⓜatilah $ingapura⚠️ said...

@ Virgo49:

Taking a hit is part of life lah. Sooner or later everyone will lose money---I consider this a "life tax", and from my own painful experiences it's better to treat such cases as "sunken cost" than to pursue recovery, which usually costs MORE in the end than you'll be able to recover.

I also don't rely too much on "buyer beware" or "caveat emptor". People who are cautious and do due diligence get conned everyday.

Since most people have an in-built ENTITLEMENT MENTALITY, the more cautious they are, the angrier they become when they get ripped-off. They highlight that they are "special" by claiming "I work hard and am an honest person"...and this is the basis of their entitlement mentality. Their unspoken claim is that they are "special" and thus ENTITLED to fairness or justice because they are "hardworking and honest". ๐Ÿ˜‚

Suck it up and be an adult lah. The world is not fair and there's no such thing as "karma". No one is "entitled" to anything. ๐Ÿ˜