Friday, April 24, 2015

Why do regulators think spoofing is harmful?

Spy vs. spy? Spoofers vs. front-runners?

(Apr. 22) Regulatory lapses at all levels aside, one reaction to this week's flash crash arrest a lot of people have is: Tough luck on them! If you're making your trading decisions based on the trading decisions that you think other people have made, you are a bad guy, and you deserve to be tricked. Do spoofers only harm front-running high-frequency traders who try to profit by trading ahead of other legitimate orders?

Regulators closing repo-market data gaps

But more work needed despite gains

(Apr. 23) U.S. regulators are making progress addressing data gaps in repurchase agreements and securities lending market, an Office of Financial Research analyst said in a brief, adding that lack of data and "limited understanding" of structure of repo and securities lending markets prevented regulators from responding during the financial crisis. More work is needed, the analyst said, and "the risk of asset fire sales before or after a counterparty default remains largely unaddressed."

Residential mortgage-backed securities

Treasury sees progress in benchmark deal dream

(Apr. 23) Industry discussions yielding "broad consensus around the role and duties" of proposed "deal agent" is evidence that Treasury's effort is "bearing fruit," Treasury official Michael Stegman said. Credit rating agencies should consider whether deal agents will help reduce losses sustained by investors "and consequently, merit reduced subordination requirements."

Biggest investors only need one dark pool

Would cut fees, says world's biggest wealth fund

(Apr. 20) Norway's $890b wealth fund says institutional investors, and the savers they represent, are wasting money paying multiple fees amid a fragmentation of anonymous trading venues over the past decade; the dark pools have become associated with the phenomenon of front-running, in which bid and offer information is used by high-frequency traders to preempt transactions and make a profit at the expense of investors.

Binge Reading Disorder

To take our minds off all of the above

How to Find Your Bliss: Joseph Campbell on What it Takes to Have a Fulfilling Life (Brain Pickings)
The Mystery of China's Gold Stash May Soon Be Solved (Bloomberg)
Leonardo da Vinci's Resume (Cenedella)
Comedy vs. Anti-Science: 10 Amazing Videos That Show How Humor Can Make a Difference (Salon)
A Dozen Things I've Learned from Ben Carlson about Investing (25iq)

Transparency. Inclusiveness. Consensus.