0.02 Prozent

In September 2013 Italy became the world’s first country to introduce a tax on high-frequency trading. Italy’s government now collects 0.02% on all trades that take place in less time than half a second.

(Nool comma nool tsvy   prote CENT.)

Den Markt mit Scheinaufträge bewegen, die im letzten Augenblick annuliert werden

“Moving the market with fake orders that are cancelled at the last moment,” one issue Germans have worried about with high-frequency trading.

In addition to worrying about H.F.T., Germans have also worried about hedge funds, since the Clinton White House. A German review of Michael Lewis’s new book said in jurisdictions where high-frequency traders aren’t required to register as such, they often call themselves hedge funds.

(Dane   MAWKED   mitt   SHINE ow! f tr ague en   bev AGUE en,   dee   im   lets ten   OW! g en blick   on newell EARED   vair den.)

Blitzjungs

Lightning boys, in Süddeutsche Zeitung’s review of Michael Lewis’s new book on high-frequency trading.

(BLITS yoongs.)

Möglicherweise bevorzugt behandelt

Possibly gave preferential treatment.

Hedge funds, unlimited short selling and now high-frequency traders have been for some time a regular source of concern for financial consumer protection advocates in Germany. The Frankfurter Allgemeine Zeitung recently reported on high-speed automated trading-related investigations that diverse U.S. financial regulators at various levels are making.

  • The F.A.Z. said the U.S. Securities and Exchange Commission is investigating whether certain software programs might accelerate transactions for some traders and not others.
  • The state of New York’s attorney general, Eric Schneiderman, accused U.S. stock markets of using computer hardware to give speed advantages to high-frequency traders, to the detriment of private investors. He said the markets are letting high-frequency traders set up their computers inside the markets’ data centers and giving them access to “ultrafast” cables connecting to the markets’ networks.
  • The U.S. Commodity Futures Trading Comission is investigating “complex agreements between so-called high-frequency traders and the [Terminbörsen: derivative exchanges, or futures markets] Chicago Mercantile Exchange and Intercontinental Exchange. The agreements have to do with rebates for the execution of stock orders.”

Last month the company Business Wire, which the F.A.Z. said is a competitor of Marketwired and a subsidiary of Berkshire Hathaway, agreed to stop providing similar services. Warren Buffet stopped the practice working with Eric Schneiderman after it was found that high-frequency traders had been able to obtain these data directly from Business Wire, rather than via the official route through high-speed subscriptions to intermediary news agencies such as Bloomberg, like everyone else.

A data specialist firm called Nanex said a 100-millisecond difference in publication delivery of a company’s press statement had at least once sufficed to earn a profit of US$800,000.

In a related F.A.Z. op-ed, the author commented that the S.E.C. in Washington, D.C., should have been doing much of this regulatory work, but lately Attorney Schneiderman has been “making them legs.”

Update on 03 Apr 2014: One of many interesting responses to Michael Lewis’s 60 Minutes interview about his new high-frequency trading book, Flash Boys, said the relevant wireless connections are faster than fiber optic connections.

The F.B.I. said it too is investigating.

(MIG lichh ah VISE ah beh FORD sooked beh HOND alt.)

Hochgeschwindigkeitshandel

“High-speed trading.” On 25 Sept. 2012 the German social democrat party SPD (the opposition to Chancellor Angela Merkel’s conservative CDU/CSU + FDP coalition) announced their new proposed financial platform of increasing banking regulation, splitting “universal” banks into a business bank and an investment bank, creating an FDIC-type emergency fund with the banks’ own money to save troubled banks, capping mortgage debt at 80% of the unit’s value and limiting high-speed stock trading. One day later, on 26 Sept., Germany’s financial minister Wolfgang Schäuble (CDU) announced that the German government wants to limit high-speed stock trading.

ZDF heute journal said the government was now calling for the following: registration of high-speed traders, disclosure of computer code if a problem occurs and higher fees after too many “fake attacks” in which high-speed traders pretend to buy a stock in order to drive up the price, then rapidly cancel the larger purchase and sell what they were actually holding at the new higher price.

Respect for Wolfgang Schäuble’s quietly reasoned-sounding explanations. Simple, straightforward, highly credible-sounding. He does a great job with them. He’s also quite clever, distracting me from banking reregulation by seizing on this high-speed trading point.

According to tagesschau.de, Schäuble is calling for “mandatory licensing for high-speed traders. Transparency that enables the supervisory authority to identify abuses faster. And the ability for the stock market supervisory authority to, when bad developments are identified in the market, to immediately halt trading.” On 26 Sept. his political opponent in the SPD responded that this doesn’t go far enough and called not only for licensing of trading firms but also of trading algorithms. Germany’s Green Party said the simplest way to handle this would be to forbid high-speed trades, and furthermore that the government is limiting itself to too much of an observing, witness, role, rather than regulating. And the techie German Pirate Party said…?

(HOKE geh SHVIN dig kites hon dell.)

Blog at WordPress.com.