zero hedge Sun 2010-05-09 09:15 EDT

Where Was Goldman's Supplementary Liquidity Provider Team Yesterday? A Recap Of Goldman's Program Trading Monopoly

In addition to having said many things about HFT in general in the last year, over the past 12 months Zero Hedge has focused a lot of attention specifically on Goldman's dominance of the NYSE's Program Trading platform, where in addition to recent entrant GETCO, it has been to date an explicit monopolist of the so-called Supplementary Liquidity Provider program, a role which affords the company greater liquidity rebates for, well providing liquidity (more on this below), and generating who knows what other possible front market-looking, flow-prop integration (presumably legal) benefits. Yesterday, Goldman's SLP function was non-existent. One wonders - was the Goldman SLP team in fact liquidity taking, or to put it bluntly, among the main reasons for the market collapse...Readers are welcome to go back through our archives and acquaint themselves with the NYSE's SLP program, with Goldman's domination of program trading, with Goldman's domination of dark trading venues via the Sigma X suite, with Goldman's domination of flow trading via Redi X, and with Goldman's domination of virtually every vertical of the capital markets, which would be terrific if monopolies were encouraged in the US...We have long claimed that Goldman is the de facto monopolist of the NYSE's program trading platform. As such, it is certainly the case that Goldman was instrumental in either a) precipitating yesterday's crash or b) not providing the critical liquidity which it is required to do, when the time came...

Goldman's Program Trading Monopoly; Goldman's Supplementary Liquidity Provider Team; Recap; Zero Hedge.

Jesse's Café Américain Sun 2010-05-09 09:08 EDT

PLUNGE! 1987 Style Sudden Drop in US Stocks Driven by Program Trading and a Ponzi Market Structure

Jesse

US equities were gripped by panic selling as the Dow plunged almost 1,000 points driven by a cascade of 100 share high frequency program trading, estimated to have been about 80% of volume. Gold rocketed higher to $1,210...This is highly reminiscent of the 1987 crash driven by a flawed market structure based on automated trading and bad theories. The entire stock market rally which we have seen this year off the February lows resembles a low volume Ponzi scheme, and formed a huge air pocket under prices. This US equity rally was driven by technically oriented buying from the Banks and the hedge funds. There was and still is a lack of legitimate institutional buying at these price levels. This was machine driven speculation enabled by the lack of reform in a system riddled with corruption...

1987 Style Sudden Drop; Jesse's Café Américain; plunge; Ponzi Market Structure; program-trading; Stocks driven.

Tue 2010-04-27 08:27 EDT

Web of Debt - COMPUTERIZED FRONT RUNNING: ANOTHER GOLDMAN-DOMINATED FRAUD

Ellen Brown

While the SEC is busy investigating Goldman Sachs, it might want to look into another Goldman-dominated fraud: computerized front running using high-frequency trading programs...Wall Street commentator Max Keiser...claims to have invented one of the most widely used programs for doing the rigging. Not that that's what he meant to invent. His patented program was designed to take the manipulation out of markets. It would do this by matching buyers with sellers automatically, eliminating ``front running'' -- brokers buying or selling ahead of large orders coming in from their clients. The computer program was intended to remove the conflict of interest that exists when brokers who match buyers with sellers are also selling from their own accounts. But the program fell into the wrong hands and became the prototype for automated trading programs that actually facilitate front running...Keiser and HSX co-founder Michael Burns applied for a patent for a ``computer-implemented securities trading system with a virtual specialist function'' in 1996, and U.S. patent no. 5960176 was awarded in 1999...The listing for Keiser's patent shows that it has been referenced by 132 others involving automated program trading or HFT...

Computerized Front Running; debt; Goldman-dominated fraud; Web.