Tuesday, May 29, 2012

steveo here:

The problem with current trading environment is that too much volume is in too few hands, AND those hands talk behind the scenes, directly, and now indirectly through their momo following computers with HFT as a subterfuge.    Regular people just can't get on these super fast moves, yet the computers can blast away with some HFT as a signal to other computers....hey lets get ready to rape the public, and then boom momo run all in coordination, and without those pesky incriminating phone calls and emails or skypes.

Meanwhile, keep in mind, all the whining, and all the conspiracy theories in the world do not for a minute, even a moment make YOU less than 100% responsible for YOUR trade results, and for YOUR obligation to plot your weekly equity curve, and give 20 minutes of analysis to what is probably 20 to 50 hours of trading.     Just saying, if you are using conspiracy to cover up your own failings, then you are on a rocky road to hell, like it or not.

Some direct email below from the CFTC to fellow blogger at TF Metals.  

Below from TF Metals

CFTC response...

In the last thread I posted that I had emailed the CFTC today.  Well I've received a couple of responses from Bart Chilton that he has given permission for me to repost.
Bart: The investigation has taken too long. That said, if it was as simple as some suggest (concentrated power regularly manipulating prices) we would have either prosecuted it or said it wasn't there years ago. It isn't that simple. These are global markets (think foreign regulators, foreign holdings, various entities and trading partners to start off with) where things are traded and sliced and diced into physical and other myriad exotic products. These markets can sometimes be like giant shell games. Trying to figure everything out just is not as easy as one might think.
I expect we will conclude in the next few months. Btw, I've spoken many times about this. If you Goggle my name and King World, or Tom O'Brien, or Jim Paplava, something should come up.
My response:
I appreciate your quick response. I know more about the markets than 
most, but I can't pretend to descend to the level of complexity you 
refer to below. However much I understand, I know that there's 5x as 
much going on under the surface that I have neither exposure or access 
to. As such I appreciate your argument below.

Answer me this one question though... is it not possible to pull the 
trades during various price waterfalls to determine if they are being 
created by the same entity? And if they are, is there not some simple 
threshold that can be applied to them that paints the line between 
regular trading and (illegal) manipulation?
Bart again:
To answer your question, yes, we can and have pulled the trades...and continue to do so. The investigation was for a time period certain, but as a matter of course, we constantly look at trades. There has been a deeper and more thorough examination of silver in the past 5 months than at anytime since I've been at the Agency (2007). Again, the investigation is separate from our normal surveillance. Like many markets, silver has changed a lot in recent years. There are new market participants and new technologies being used. Take a year ago May 1 when silver dropped 12 percent in as many minutes in after hours trading. One has to think about the cheetah HFTs in this regard, when a few milisecond trades in sparse liquidity can move a market so dramatically. We saw that in Nat Gas last June also, and it went down 7 percent in seconds. So, the markets are morphing and we have to look at things differently.
I can't get into specific trader info or positions, that's prohibited. However, we are looking constantly and I hope the investigation will wrap soon.
Finally, position limits will help. Those have also been delayed by the bureaucracy, not to mention a law suit that seeks to stop the limits implementation.
I know it is frustrating waiting for the wheels of government to turn. We are human and government is a human institution. Some suggest I'm an apologist for the Agency. They can say what they want. I think I just have an understanding of how things work, and all too often don't work like they shoulda would or coulda. You can only do your best in life, and that's what I'm doing.

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Insightful and Useful Comment!