"We risk becoming the best informed society that has ever died of ignorance"
- Rubén Blades

"You can't make up anything anymore. The world itself is a satire. All you're doing is recording it"
- Art Buchwald

"It's getting exciting now, two and one-half. Think of everything we've accomplished, man. Out these windows, we will view the collapse of financial history. One step closer to economic equilibrium"
- Tyler Durden

"It is your corrupt we claim. It is your evil that will be sought by us. With every breath, we shall hunt them down."
- Boondock Saints

Monday, September 5, 2011

SEC's New Weapon Against HFT; The Commodore 64

We have an idiotic regulator.  The SEC is designed to police markets and fails miserably at it.  We have a President who fired a General Motors Manager and a public ready to fire anyone who can't dance.  This stuff on HFT is well above the capacity of understanding that maybe 70% of the American public is currently hovering around.  Walking through the mall the other day I was able to hear the conversations of the informed and worried public..."I hope Snooki helps the Jersey recover from Irene...I think planking is cooler than owling...Lady Gaga lost me with the boy, cross-dressing thing".  Until the public realizes what they're up against (might be a long time with TV and Smartphone providing an adversary to knowledge and power.  Derek Bok said “If you think education is expensive, try ignorance".

The lack of intelligence gained through education in this country is the elephant in the room.  The conversation coming from Washington as of late has focused on their understanding that they are expected to create jobs.  This viewpoint shows the crossroads this country has crossed, as human capital is no longer available in ample amounts and that the people have for so long lived free, they can no longer do anything on their own. 

So Average Joe, in his 20's, making $40,711 stores away $15,500 and expects the SEC will have time to help watch over that savings, in between porn movies or course and Algebra class.  That's a relief, we can sit back and trust the SEC is doing everything it can to protect the public's paltry savings that haven't been spent on Coach purses or Budweiser yet,

From Dealbreaker:
After decades of responding to tips about fraud by writing notes on napkins and then throwing them away, the Securities and Exchange Commission finally got itself some computers and is excited to put them to use. Legitimate use. First up: figure out if maybe the computers are in fact the problem.

U.S. securities regulators have taken the unprecedented step of asking high-frequency trading firms to hand over the details of their trading strategies, and in some cases, their secret computer codes.
The requests for proprietary code and algorithm parameters by the Financial Industry Regulatory Authority (FINRA), a Wall Street brokerage regulator, are part of investigations into suspicious market activity, said Tom Gira, executive vice president of FINRA’s market regulation unit….
SEC examiners want the information to ensure that hedge funds are actually using the strategies they market to investors. They also review it to make sure that algos are not being used to manipulate the market.
If you were considering just submitting a confusing fake algorithm to cover up the fact that your algorithm does in fact operate by manipulating the market and/or that you’re running a Ponzi scheme and your “algorithm” involves mainly blowing investor money on personal expenses, and you were thinking that the SEC isn’t computer savvy enough to notice – well, you’re not alone:
Even though the SEC believes it needs this algorithm information to help it police the market, many on Wall Street are still not convinced the agency will know what to do with the data.
“Let’s just say the good developers in the industry are being hired by the industry — not by an SEC salary,” a trader said.
But you might be wrong. Reuters reports that the SEC has acquired a couple of Ph.D. and ex-industry quants, headed by Rick Bookstaber, formerly of Bridgewater and other hedge funds. So they may well understand the finer nuances of your trading algorithms. Though that too might be objectionable:
It has alarmed some traders who are afraid their “secret sauce” — intellectual property sometimes developed over years and at great cost — could get into the wrong hands, especially when SEC and FINRA examiners leave for the private sector.
“I’d be disappointed and upset” if they asked for code, said a high-frequency trading firm executive who declined to be named. “I mean, are these people all going to work at the SEC forever?”