http://market-ticker.org/akcs-www?post=224292
( Until the rigging is stopped , just boycott trading.... )
I've marveled for years at reports buried in the earnings releases for major banks in which they appear to be able to repeatedly churn out trading results that not only buck the odds they defy physical statistical reality.
I'm speaking of the penchant for big banks to turn in perfect quarterly trading records -- three month periods where they never once having a losing day.
The statistical probability that a given bank, or even a bunch of them, have all of the smartest people working for them and nobody beats them, ever, through honest and fair dealing is simply not plausible. It is one thing to pull it off once in a while, but the repetitive pattern of these events is virtually proof of cheating in some form, whether legal or not.
The other day there was an obscure notice of a whistleblower lawsuit filed by a big bank guy. It wasn't immediately clear exactly what the conduct was that had been observed and was not being exposed.
Matt Taibbi over at Rolling Stone just blew the cover off that box and what's inside is a nasty many-headed hydra:
Thompson Reuters has denied the allegations in the lawsuit, but if they are true, and certainly if this applies to more than just one piece of data (like, perhaps,all of them?) it would certainly explain how statistically-impossible results seem to happen with disturbing regularity when big banks are concerned.
Keep your eyes open on this one, because it is you who is being robbed.
This exact situation, whether it turns out to be illegal or not, is why these institutions should never be allowed to trade on their own under any circumstances. When you are put in a position where you can profit from your customer's loss the incentives to rig the game so you win and the customer loses become so ridiculously lop-sided that they will happen and you will get screwed.
It was this, far more than anything else, that made Glass-Steagall demonstrably correct from a legislative point of view.
Yesterday's record Verizon bond offering, which to some had an eerie sense of deja vu to the TXU 2007 mega-LBO just before the market blew up, caught many by surprise: not only did the underwriters have no problem obtaining over $100 billion in orders to oversubscribe demand for the $49 billion offering, but following the break the bond immediately proceeded to trade a whopping 40-70 bps tighter implying yield pricing could have been done well lower, but the CDS also ripped 11bps tighter. Because nothing says less default risk like $49 billion more in debt. But where did all this demand come from? Did accounts simply have $100 billion in cash lying around? The answer is no, and as the following breakdown of the post-break action in VZ from Deutsche demonstrates, what happened yesterday was agreat rotation into the NSA-favorite company and the Telecom space in general, and out of virtually every other credit in the market.
There was a time when, if selling a sizable amount of a security, one tried to get the best execution price and not alert the buyers comprising the bid stack that there is (substantial) volume for sale. Of course, there was and always has been a time when one tried to manipulate prices by slamming the bid until it was fully taken out, usually just before close of trading,an illegal practice known as "banging the close." It appears that when it comes to gold, the former is long gone history, and the latter is perfectly legal. As the two charts below from Nanex demonstrate, overnight just before 3 am Eastern, a block of just 2000 GC gold futures contracts slammed the price of gold, on no news as usual, sending it lower by $10/oz. However, that is not new: such slamdowns happen every day in the gold market, and the CFTC constantly turns a blind eye. What was different about last night's slam however, is that this time whoever was doing the forced, manipulation selling, just happened to also break the market. Indeed:following the hit, the entire gold market was NASDARKed for 20 seconds after a circuit breaker halted trading!
Just three weeks ago, Goldman Sachs cried 'uncle' when their market-making options algo-machine exploded in a fit of guilt causing the firm to face hundreds of millions of dollars losses (should the exchange not have DK'd the deals). Nanexhas investigated the rogue algo and here are the findings... "As soon as option quotes in the affected symbols began exceeding theoretic economic values by some threshold, quotes (and therefore liquidity) on other options exchanges for those contracts would immediately disappear - bid/ask prices would go to zero at other exchanges. Within 10 seconds of starting, one algo, in effect, completely destroyed the concept of the National Market System and obliterated liquidity..." As they sadly conclude, what was the fine for shutting down an options exchange, and destroying liquidity in hundreds if not thousands of options contracts? There was no fine. Worse, they were able to get the trades busted. As in, pretend we didn't just do that. Pretty shocking. Until there are financial consequences for firms that turn on market disrupting algos, the markets, will continue to be disrupted.
( Until the rigging is stopped , just boycott trading.... )
(Legally) Burn Them All To The Ground
I'm speaking of the penchant for big banks to turn in perfect quarterly trading records -- three month periods where they never once having a losing day.
The statistical probability that a given bank, or even a bunch of them, have all of the smartest people working for them and nobody beats them, ever, through honest and fair dealing is simply not plausible. It is one thing to pull it off once in a while, but the repetitive pattern of these events is virtually proof of cheating in some form, whether legal or not.
The other day there was an obscure notice of a whistleblower lawsuit filed by a big bank guy. It wasn't immediately clear exactly what the conduct was that had been observed and was not being exposed.
Matt Taibbi over at Rolling Stone just blew the cover off that box and what's inside is a nasty many-headed hydra:
Back in June, journalist Simone Foxman at the global economic site Quartz reported that in addition to the two-second head start some Thomson Reuters customers were getting on the release of the University of Michigan Survey of Consumers, other customers may have been getting their data even earlier, "nearly an hour in advance" in some cases.10 minutes to an hour early, all undisclosed?
Rolling Stone has since learned that a whistleblower complaint has been filed to the SEC identifying 16 of the world's biggest banks and hedge funds as the allegedly even-earlier recipients of this key economic data. The complaint alleges that this select group of customers received the data anywhere from 10 minutes to an hour ahead of the rest of the markets.
Thompson Reuters has denied the allegations in the lawsuit, but if they are true, and certainly if this applies to more than just one piece of data (like, perhaps,all of them?) it would certainly explain how statistically-impossible results seem to happen with disturbing regularity when big banks are concerned.
Keep your eyes open on this one, because it is you who is being robbed.
This exact situation, whether it turns out to be illegal or not, is why these institutions should never be allowed to trade on their own under any circumstances. When you are put in a position where you can profit from your customer's loss the incentives to rig the game so you win and the customer loses become so ridiculously lop-sided that they will happen and you will get screwed.
It was this, far more than anything else, that made Glass-Steagall demonstrably correct from a legislative point of view.
Precious Metals Monkey-Hammered As Equity Winning Streak Ends With A Thud
Submitted by Tyler Durden on 09/12/2013 - 16:11
It started early this morning as Asia really went to bed - when gold markets were temporariliy halted. Someone decided that was the perfect time to sneak a few thousand contracts through the futures market (and clearly has no fiduciary duty to a client for best execution). As the US day-session opened, it was silver's turn totake a hiding (and gold less so that time); and then into the close, with both precious metals (and copper) heading towards their lows, Silver nose-dived (now -8% on the week) and its worst day in almost 3 months. Away from precious metals, Oil surged back over $109 as Syria chatter hotted up again (from Assad this time), the USD slid further (though ended flat on the day after an opening dump), and Treasuries shrugged off early gains to close red even as stocks closed lower (despite a late-day ramp effort) - breaking the streak and stunning a few TV anchors as VIX-slam and the 'short squeeze' seems over for now.
The "Great Rotation" Into Verizon: Where Did The Money Come From?
Submitted by Tyler Durden on 09/12/2013 - 08:10Yesterday's record Verizon bond offering, which to some had an eerie sense of deja vu to the TXU 2007 mega-LBO just before the market blew up, caught many by surprise: not only did the underwriters have no problem obtaining over $100 billion in orders to oversubscribe demand for the $49 billion offering, but following the break the bond immediately proceeded to trade a whopping 40-70 bps tighter implying yield pricing could have been done well lower, but the CDS also ripped 11bps tighter. Because nothing says less default risk like $49 billion more in debt. But where did all this demand come from? Did accounts simply have $100 billion in cash lying around? The answer is no, and as the following breakdown of the post-break action in VZ from Deutsche demonstrates, what happened yesterday was agreat rotation into the NSA-favorite company and the Telecom space in general, and out of virtually every other credit in the market.Vicious Gold Slamdown Breaks Gold Market For 20 Seconds
Submitted by Tyler Durden on 09/12/2013 - 07:47There was a time when, if selling a sizable amount of a security, one tried to get the best execution price and not alert the buyers comprising the bid stack that there is (substantial) volume for sale. Of course, there was and always has been a time when one tried to manipulate prices by slamming the bid until it was fully taken out, usually just before close of trading,an illegal practice known as "banging the close." It appears that when it comes to gold, the former is long gone history, and the latter is perfectly legal. As the two charts below from Nanex demonstrate, overnight just before 3 am Eastern, a block of just 2000 GC gold futures contracts slammed the price of gold, on no news as usual, sending it lower by $10/oz. However, that is not new: such slamdowns happen every day in the gold market, and the CFTC constantly turns a blind eye. What was different about last night's slam however, is that this time whoever was doing the forced, manipulation selling, just happened to also break the market. Indeed:following the hit, the entire gold market was NASDARKed for 20 seconds after a circuit breaker halted trading!Rogue (Goldman) Algo Exposes Cracks In The Options Market
Submitted by Tyler Durden on 09/11/2013 - 21:23Just three weeks ago, Goldman Sachs cried 'uncle' when their market-making options algo-machine exploded in a fit of guilt causing the firm to face hundreds of millions of dollars losses (should the exchange not have DK'd the deals). Nanexhas investigated the rogue algo and here are the findings... "As soon as option quotes in the affected symbols began exceeding theoretic economic values by some threshold, quotes (and therefore liquidity) on other options exchanges for those contracts would immediately disappear - bid/ask prices would go to zero at other exchanges. Within 10 seconds of starting, one algo, in effect, completely destroyed the concept of the National Market System and obliterated liquidity..." As they sadly conclude, what was the fine for shutting down an options exchange, and destroying liquidity in hundreds if not thousands of options contracts? There was no fine. Worse, they were able to get the trades busted. As in, pretend we didn't just do that. Pretty shocking. Until there are financial consequences for firms that turn on market disrupting algos, the markets, will continue to be disrupted.
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