HFT Is a-Courtin’ The Farmers
Politico just published an article titled Speedy Traders Woo Farm Groups. The article details how high frequency traders like Allston Trading and RGM Advisors are continuing their public relations campaign to improve their image. You may recall that while they already have several lobbying groups, such as the FIA’s Proprietary Trading Group, they recently launched something called the Modern Markets Initiative, which is being advised by two DC insider hired guns who were former Presidential Campaign image Gods.
The article highlights how important transforming their image is to them. Image is so important to these HFT firms that since the article came out, apparently the HFT firms asked/forced Politico to change the name of the article to Automated Traders Woo Farm Groups, instead of Speedy!
The Politico article describes how these high frequency trading firms [who have been concerned that the farmers and agricultural folks have been telling Washington that HFT increases volatility in their markets, causes big bigger price swings, makes it more expensive to hedge, and increases their costs] have been reaching out to speak with folks like National Grain and Feed Association Vice President of Marketing and Treasurer, Todd Kemp, as well as others. The goal of the discussions was apparently to show that
“the greatest value would be that a human being from Chicago shows up and that he doesn’t have horns.”
RGM founder Richard Gorelick is quoted in this article as claiming that the farmers are his customers, and now he and his fellow HFT players feel it is about time to “know their customer.” [PS – Someone should remind the farmers that RGM is a prop trading firm with NO customers]:
“As professional intermediaries in an exchange-based market, it’s a weird situation because we don’t know our customers,” said RGM Advisors CEO Richard Gorelick, another member of the principal trading group. “We’re providing services to these end-users, but the exchange sits in the middle. We don’t have an opportunity to say, hey, is this working for you, is this not working for you, so this gives us an opportunity.”
Feel free to read the Politico article. Or, if you prefer, you can read our translation of the article below! And to our farmer friends, please know that we respect your intellect and know that you are intelligent and able to understand the difference between image and fact. We know that you need more than “someone who will just show up and say hi that doesn’t have horns”. So, if you want to have a handy desk reference at your ready once the HFT crew comes courting again, here you go – everything you wanted to know about HFT and “Market Making”.
Politico Article Translation:
I know y’all are the back-bone of America and the world even! We have such great respect for you. And we are really similar, when you get right down to it. Why, many of us are even products of the Midwest. Many of us are among the Frozen Chosen just like you all! Why, I remember the time in Kansas when my Daddy caught me smoking behind the grain elevator…. but there I go yapping again…
For crying out loud, we want to just tell y’all about the good things we do for you. I know y’all think we just schnooker you. But truth is, we add liquidity and shrink spreads. Our presence in markets makes it easier for y’all to do your hedge things. You remember when your trades used to be slower than molasses in January? Well now you know you are hedged lickety-split! Some of them government regulator types like to throw around scary words like “financialization” and “speculators” – as if we are bad things for physical markets… as if we affect price moves and stuff. Hogwash is what that is! We are here to add liquidity and make it easier and cheaper for you to trade. Outta the goodness of our hearts.
You ever have a really good piece of pie? Almost religious experience right? Listen. A little pie is good! And we’re top tell you that so is a lotta pie! And we will bring you a lotta pie.
We want you to know that you are kind of like our customers, and we felt that the fact that we have never met face to face and shook hands and smiled at each other…. well, that made about as much sense as government cheese. So here we are! We are partners, friends, and all want the same things in life….
So… it was great meeting you! Thanks for allowing us to come visit. See, we ain’t so scary! So please… tell your Senators and Congress folk that we are here to help you, and oh for cute…. We are darn nice guys! All those guys that say that HFT and high frequency trading is bad? Well, they all got the holler tail! We don’t know what’s gotten in their britches…
I am really happy we met. Don’t y’all feel good too, now?”
Your Friendly Neighborhood HFT Firm