On Sat, Nov 7, 2009 at 10:26 AM, Marv Gandall <[email protected]> wrote: > Delaware Senator Ted Kaufman's observations that dark pools have risen from > 1.5 to 12 percent of > market trades in five years and that flash trading has "skyrocketed" to 70% > of daily trading volume, if true, can't be easing those concerns. >
More on high-frequency trading (or how, bad and anti-social as it is, it is not a big enough factor in the profits of financial firms. So then, how does Goldman Sachs make its money?). http://www.businessinsider.com/sorry-goldmans-mega-profits-didnt-come-from-high-frequency-front-running-2009-7?mobile=1/ ------------------------------------------------------snip That said – these profits can’t add up to sufficient to explain Goldman’s trading profit.Interactive Brokers is (by far) the most electronic and lowest cost broking platform in the world.We use it extensively as do many others. Interactive Brokers has a 12 percent market share in option market making globally and probably a 10 percent share in all market making. Trading revenue was about 220 million. Moreover in the conference call the CEO/Founder (Thomas Peterffy) thought the influx of competition in the area had reduced market maker margins very substantially. Anyway if 10 percent of global stock volume provides 220 million dollars revenue per quarter then there is no way that a substantial proportion of Goldman’s trading profit can come from high frequency trading. The numbers do not work. When the New York Times quotes William Donaldson (a former CEO of the New York Stock Exchange) as that high frequency trading “is where all the money is getting made” they are quoting bunk – and they should know it. This is a plea. Can we have a dispassionate and accurate view of where the (vast) trading profits of Wall Street in general (and Goldman Sachs in particular) come from? The last big boom in trading profits was followed by a bust which came at huge social costs. [Look what happened to Lehman.] We cannot understand the risks “Wall Street” is taking and hence the economic downside if it all turns pear shaped, and the appropriate regulatory structure, unless we know what is happening. Mindless articles such as the recent New York Times one – grossly inconsistent with facts are less than helpful. They are distracting. -raghu. -- "Really ?? What a coincidence, I'm shallow too!!" _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
