HFT’s Form European Lobby Group As Bart Chilton Calls Them Out
HFT’s in Europe have had it up to here with the “negative” publicity. They’ve had all they can stand, and they can’t stands no more. They have finally decided to speak up and let the world know exactly what is it that they do. Well, not exactly. Instead, what they are going to do is form a new lobbying group so that they can, behind the scenes, press the politicians and regulators to make sure they do not make any changes to their fragmented mess of a market. And who better to lead this new lobbying group but one of the founders of the European division of Getco. The European group will be a subsidiary of the U.S.-based trade association the Futures Industry Association (FIA), which is the U.S. HFT lobby group. These are guys who camp outside of Rep. Bachus’ office and help him write letters to the SEC asking them to slow down any reform. According to the Financial News, “many of the member firms feel “personally very affronted” by the avalanche of negative publicity surrounding proprietary and high frequency trading activity, in particular the implication that HFT firms profit at the expense of the lay investor.” Well, you know what they say, if the shoe fits, wear it.
The European FIA lobby group should stop worrying so much about their image and start worrying about what CFTC commissioner Bart Chilton is going to say today at a conference in Amsterdam.
According to the FT Read FT article here , “Mr. Chilton is going to sound the alarm over allocation algorithms that may be used at some exchanges. These allow certain so-called high-frequency traders to cut the queue and get ahead of other traders in the market. The allocation algorithms” may not necessarily accept the first or best bid or offer but weigh the size of a trade as well, before deciding which traders gets the deal, Mr Chilton will say.”
“From an exchange business purpose, I get it. More volume equals more money for the exchanges. However, cheetahs may be gaming the system by bidding or offering more contracts than they believe will be filled simply to cut the queue to get ahead of other traders. There is every reason to assume that a cheetah’s algo programme could determine the size of the order that would allow them to cut the queue, Mr. Chilton says.”
Go get’ em, Bart. It’s nice to know that we have at least one regulator who is not afraid to take on the powerful HFT lobby. But be careful not to call them names. They get easily offended and may feel “personally very affronted”. Bwahhhhh !!!