11/07/2013

What is HFT or High Frequency Trading

Business Times journalist Sivanithy wrote an article(yesterday) on SGX’s initiative to consult the public on HFT trading in the SGX. The introduction of the HFT is now a matter of when, so what is this public consultation all about? Should not the SGX try to educate the public on what this HFT is all about, the pros and cons of this newcomer?
 

Sivanithy asked a few very basic and pertinent questions. What is HFT and the need for SGX to educate the public on this new animal that it assumed everyone knows what it is but the truth is that no one knows. It is not as simple as what people think, that HFT is there to provide liquidity in the market to benefit the other traders.
 

Without knowing how this animal works, what kind of advantage it has over the rest of the players, no one knows how dangerous or what harm it can cause to the market. One thing for sure, HFT is not here to do charity. Its mission is simply to take advantage of any arbitrage situation to take profits. Technically, it can only make profits and not losses. So, how is this going to benefit the other players? How can the exchange allow HFT or any other instruments to enter the market with a clear cut advantage, to make profits while other players lose?
 

This applies to Algorithm trading. The Algo players have the advantage of their super computers to compute and take positions to make profits. It is like a sure bet. And who are the losers or the sure losers? The exchange should have enough data by now on who are the big net gainers from the market. Both Algo traders and HFT traders are more or less guaranteed to profit from the system with the aid of high tech equipment. This is a violation of the exchange’s guiding principle and responsibility of providing a level playing view.
 

What is the SGX and MAS’s positions on this? Is it fair to the rest of the traders? Are they breaking their own rules and regulations?
 

There is a need to tell the whole story on the capabilities of the HFT and Algo trading technology? Don’t just tell the people how good they are. The public and the govt need to know how harmful they are. The public were told how good the Lehman Bonds and toxic notes were but nothing about how bad they could turn out. We need to learn from that mistake and handle this new animal with great care.
 

What information is made available to them and not to the other traders and how they can take advantage of the information to make assured profit? If the technology can assure them of profits, how can they be allowed to do so when other traders enter the market with the risk of losing instead of making profits? How can SGX/MAS allow HFT and Algo traders to play in the market when they can only be winners and paying a small clearing fee? Is this the case?
 

The public and other traders have the right to know what they are up against. There is a need for transparency and disclosure on what these two systems can do and are doing. How many Algo computers are already hooked onto the SGX computers and how many HFT computers will be allowed into the system?
 

It is the responsibility of MAS and SGX to provide a level playing field and fair play. Period. The public cannot be let into a market blindfolded without knowing how dangerous these new players are and what they are up against, and with their hands tied.

30 comments:

  1. GST is to help the poor.
    MRT fare increase is to help Singapore commuters.
    And now HFT is to help stock traders and investors.

    I'm not a millionaire like Lim Swee Say.
    So cannot say "I feel so rich".
    I can only say "Wah! I feel so lucky to have a PAP gahmen looking after me."

    ReplyDelete
  2. redbean says;
    "It is the responsibility of MAS and SGX to provide a level playing field and fair play"

    Singaporeans say;
    "It is the responsibility of LHL and PAP to provide a level playing field and fair play"

    If you believe the above.
    Please call me.
    I say;
    "I have a bridge in USA that I want to sell to you. Cheap, cheap."

    ReplyDelete
  3. If they allow casinos, why not HFT?

    Do they educate the public on casinos? Not really, tio bo?

    So why need to educate the public on HFT?

    After all, 60% do not need to be educated on which party is the best to be govt, tio bo?






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  4. I think in Sinkieland everything is boleh (can) lah, as long as there is the 60% and WP is the strongest opposition party.

    ReplyDelete
  5. The SGX is asking the Public to educate them lah.
    Each time the Government wants to be educated, it consults the People or asks for feedbacks. Then it will SCREW THE CONSULTANTS(THE PEOPLE) LEFT, RIGHT AND CENTRE.

    FUCK THE GREAT PRETENDERS.

    patriot

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  6. Smart Sinkies gamble or do HFT with money they can afford to lose.

    No need to be educated on it.

    If can make money, then it will be lagi good lah.

    ReplyDelete
  7. Surf RB blog to get educated.

    ReplyDelete
  8. Smart people don't gamble against computers.

    Smart people use computers to cheat daft sinkies.

    ReplyDelete
  9. It is the responsibility of MAS and SGX to provide a level playing field and fair play.
    RB

    Casinos got level playing field and fair play for gamblers or not, you tell me lah.

    ReplyDelete
  10. "Casinos got level playing field and fair play for gamblers or not, you tell me lah."
    Anon November 07, 2013 10:39 am

    If not, then whose responsibility to provide level playing field and fair play for gamblers?

    ReplyDelete
  11. @ Anon 10.46 am:

    // If not, then whose responsibility to provide level playing field and fair play for gamblers? //

    In the food chain or eco system, the creator provides Non- Level playing field so the system can self perpetuate and the earth survives millions of year until capitalism comes along.

    What won't work has proven in history its rightful place is eventually the dustbin.

    Many way ward or misled dynasties/ rulers eventually got discarded into the dustbins but the Chinese Civilisation has survived till now.

    Hopefully, the same applies for Sinkie Civilisation. 5 thousand years from now in 7013 our offsprings still can call themselves Sinkies just like the Chinese.

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  12. The stock market is not meant to be a casino. The rules and regulations of SGX state that they are to provide a fair system ie level playing field. And there are many regulations against unfair practices, against cheating. HFT and algo are unfair and cheating.

    One day the SGX and MAS will be sued for allowing these systems in the stockmarket. They are more destructive than lemon bonds and derivatives.

    ReplyDelete
  13. Consulting public feedback is just a statement that doesn't carry any weight. It is a fruitless exercise and just going through the motion. The decision to move forward has most probably been decided regardless of feedback. Some may call this wayang. The 6.9M is a good example.
    The Goat

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  14. Even if it is wayang, it may still has the desired good effect for daft Sinkies.

    And also no undesirable effect for the PAP. Provided of course, WP remain the strongest opposition party and as a result, the 60% for PAP outcome every GE.

    So it is still necessary to wayang, if need be.



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  15. Maybe they want public feedback so that they can identify the troublemakers in advance.
    Fix them.
    Then introduce HFT.
    So that there will be no conscientious objectors left.
    So be smart.
    Take cover.
    Act blur.
    Don't give feedback.

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  16. I think PAP will not do anything that they think may result in their being voted out in the next GE.

    So if PAP decides to have more foreigners, 6.9M population, HFT, or whatever lah, it means that despite all these, they are very confident that they will not be voted out next election.

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  17. I have written twice to them when they asked for feedback. They don't even have the courtesy of acknowledging your feedback.

    ReplyDelete
  18. ...it means that despite all these, they are very confident that they will not be voted out next election."
    Anon 12:55 pm

    Tiok. If PAP is confident, I also trust their confidence.

    If WP is not ready or confident, I also trust they are not ready and confident.

    ReplyDelete
  19. They don't even have the courtesy of acknowledging your feedback."
    RB November 07, 2013 12:58 pm

    Maybe they think u are a nobody, despite being a prominent blogger.

    Even ex Presidential candidate TKL also complained that they didn't even have the courtesy of acknowledging his feedback, so let alone yours.

    ReplyDelete
  20. @ RB 12.58pm:

    // I have written twice to them when they asked for feedback. They don't even have the courtesy of acknowledging your feedback. //

    Dale Carnegie famous way of dishing out feedback ( criticism ) is to praise the other fella till mb " the sky" ( this part self added, not by Carnegie ).

    So Lau Hero, did you plp first before give your "criticism"?

    If still didn't work, mb need "sayang sayang" the lp first ......

    If still cannot work, seek the advise of u know hu the best to ask for this type of hedonistic, decadent stuff .......

    I believe as long as Pro-Sinkieland, you will get a receptive ear or at least a reply, not just acknowledgement.

    Worst case I shall try write for you but in Chinese because "mind Ingrish not so bowelful" .... :)))

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  21. Actually I did not criticise. I, like you said, praised them alot. Still tak jalan. I copied to MAS and MAS acknowledged and even forwarded another copy to them.

    Maybe it is their corporate culture. No need to reply to anyone.

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  22. RB: Actually I did not criticise. I, like you said, praised them alot. Still tak jalan. I copied to MAS and MAS acknowledged and even forwarded another copy to them.

    Maybe it is their corporate culture. No need to reply to anyone.

    November 07, 2013 1:28 pm



    Ok, u want try option #2 first or straight to option #3?

    ReplyDelete
  23. To RB and all:

    Another 30 mins will be officially winter in China.

    Why still so veri the warm here?

    Hopefully 15 days of non-stop rain to cool the weather here and the mind of the "wolves" ......

    Then maybe RB you will get a favourable reply .....

    Via the intervention of the "divine" ....... heh heh heh

    ReplyDelete
  24. RB:

    Another suggestion to increase the tourism industry and the GDP in SinkieLand.

    To add to the synthetic garden in Marina Bay, build another giant tourist attraction for equatorial region countries around this little dot.

    One giant indoor snow integrated resort with Christmas trees, decorations, shopping mall, amusement parks, restaurants, theatres, exhibition halls etc etc and theme based not only on winter but four seasons.

    So Nov - Feb is winter theme.

    Aug - Oct is autumn theme and so on and so forth.

    Maybe make much more economic sense and profitable and revenue generating for entire economy than this Mabok idea of synthetic garden "waste" tax payer money.

    Such "wasteful projects" tend to remind one of the Sui Yang Di era before the Tang Dynasty in China .........

    ReplyDelete
  25. Third World mentality likes mega projects to fit megalomaniac ego.

    My legacy. Mahathir has his Twin Towers and what else...almost a crooked bridge to top it up.

    ReplyDelete
  26. Please let the people know if you want to unload a pail of piranhas into the reservoir. And tell the people they are piranhas and not tilapias.

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  27. The govt blind or sleeping? What has Tharman got to say about this?

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  28. Just another ponzi scheme to sell to daft voters.

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  29. Sgx runs the exchange like a gambling den in Desker Rd. MAS did not have the competence and confidence to tell them to stop. MOF partying in cloud 9. Everything must be fine.

    Today SGX CEO said worthless penny stocks bad for an exchange. When did he find that out? Yesterday?

    At least he found out. What about MAS and MOF? Still sleeping or dreaming?

    ReplyDelete