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Front running is a technical term. It means to take orders from clients, and then make trades in front of the clients orders, using the information obtained to

Front running is a technical term. It means to take orders from clients, and then make trades in front of the clients orders, using the information obtained to trade against the client. It's a very quick way to make a profit. It is also illegal. If you have any evidence that Virtu is front running, then you should report them to the SEC to be investigated.

lotsoflumens 11y ago
That's why I said I agree that the markets are broken. The SEC already knows that this occurs but chooses to not stop it.
- yummyfajitas 11y ago
  Virtu cannot front run; they are not a brokerage. Folks like E-Trade are the ones who could potentially front-run. Do you have any evidence that they are?
  - lotsoflumens 11y ago
    Do you understand the purpose of paying for order flow?
    - yummyfajitas 11y ago
      Yes - you get to trade with uninformed guys making small trades (i.e., folks too small to front-run) rather than informed traders with large amounts of adverse selection. Do you understand the mechanics of paying for order flow? could you state explicitly (i.e., a sequence of trades) how you believe paying for order flow allows you to "front-run"?
- deadgrey19 11y ago
  Either that. Or front running (in the technical sense) is not happening. If it were, other HFT's would pounce at an opportunity to declare a cheat. Occams razor suggests that systemic corruption within the SEC is less likely than the probability that trading operations are operating legally (especially in Virtu's case since they do not even have clients!).
PhantomGremlin 11y ago
Front running is a technical term You're clinging to the old definition. Pop culture has generalized the term to mean something different than it used to. It's like the word "hackers". To throw out a bunch of cliches: that ship has sailed; you can't put the genie back in the bottle; no sense crying over spilled milk. Etc. I urge you to progress quickly thru the five stages of grief and get to acceptance. Of course, that's just the layman's meaning. I have absolutely no idea if the meaning of the words "front running" will ever change in a legal sense.
- deadgrey19 11y ago
  It's possible that popularist media such as (Lewis etc) have put forward alternative ideas on what the term means, but if we are to have meaningful discussion, we must agree on what we mean in the context of this discussion. Hence attempting to add a little clarity to discussion before it gets derailed. For the moment at least, wikipedia still mostly agrees with me (whatever that is worth) https://en.wikipedia.org/wiki/Front_running https://en.wikipedia.org/wiki/Front_running If you disagree with my (technical definition) then I challenge you to provide a sound definition from which we can work. I would suggest that simply processing and executing orders quickly on the basis of public information is not sufficient.
  - PhantomGremlin 11y ago
    I challenge you to provide a sound definition I'm certainly not up to that task. But I think that lay people are using the term more generally than you are. The Wiki you cite has multiple, expanded, definitions in the section titled "other uses of the term". For example: One common practice of high-frequency traders (HFT) is a form of front running, where they peer into various exchanges and try to detect orders as they propagate from a broker's order router. That's not front running by its traditional definition. But that's probably one way that Virtu makes money. The English language (or is it the American language?) is not static. Words change meaning all the time. E.g. take the word "gay". Once it meant happy, then it became a pejorative, and most recently it has been embraced by the LGBT community. That word sure has changed meanings over the years. Rather, it probably has retained all of those meanings. https://en.wikipedia.org/wiki/Gay https://en.wikipedia.org/wiki/Gay Edit: forgot to add this: I would suggest that simply processing and executing orders quickly on the basis of public information is not sufficient. Here's an example of using what should be non-public information. Various exchanges, who investors reasonably thought were working on behalf of investors, in the public interest, were instead working for HFTs (from whom they made the most money). Hence "flash" orders, where an exchange would take an order it received from the public and "flash" or show it to its HFT buddies.[1] I don't know if the SEC finally banned that. How did receipt of my order at an exchange turn into "public" information ahead of its execution? [1] http://www.wsj.com/articles/SB124940289965505053 http://www.wsj.com/articles/SB124940289965505053

lotsoflumens 11y ago

That's why I said I agree that the markets are broken. The SEC already knows that this occurs but chooses to not stop it.

yummyfajitas 11y ago
Virtu cannot front run; they are not a brokerage. Folks like E-Trade are the ones who could potentially front-run. Do you have any evidence that they are?
- lotsoflumens 11y ago
  Do you understand the purpose of paying for order flow?
  - yummyfajitas 11y ago
    Yes - you get to trade with uninformed guys making small trades (i.e., folks too small to front-run) rather than informed traders with large amounts of adverse selection. Do you understand the mechanics of paying for order flow? could you state explicitly (i.e., a sequence of trades) how you believe paying for order flow allows you to "front-run"?
deadgrey19 11y ago
Either that. Or front running (in the technical sense) is not happening. If it were, other HFT's would pounce at an opportunity to declare a cheat. Occams razor suggests that systemic corruption within the SEC is less likely than the probability that trading operations are operating legally (especially in Virtu's case since they do not even have clients!).

PhantomGremlin 11y ago

Front running is a technical term You're clinging to the old definition. Pop culture has generalized the term to mean something different than it used to. It's like the word "hackers". To throw out a bunch of cliches: that ship has sailed; you can't put the genie back in the bottle; no sense crying over spilled milk. Etc. I urge you to progress quickly thru the five stages of grief and get to acceptance. Of course, that's just the layman's meaning. I have absolutely no idea if the meaning of the words "front running" will ever change in a legal sense.

deadgrey19 11y ago
It's possible that popularist media such as (Lewis etc) have put forward alternative ideas on what the term means, but if we are to have meaningful discussion, we must agree on what we mean in the context of this discussion. Hence attempting to add a little clarity to discussion before it gets derailed. For the moment at least, wikipedia still mostly agrees with me (whatever that is worth) https://en.wikipedia.org/wiki/Front_running https://en.wikipedia.org/wiki/Front_running If you disagree with my (technical definition) then I challenge you to provide a sound definition from which we can work. I would suggest that simply processing and executing orders quickly on the basis of public information is not sufficient.
- PhantomGremlin 11y ago
  I challenge you to provide a sound definition I'm certainly not up to that task. But I think that lay people are using the term more generally than you are. The Wiki you cite has multiple, expanded, definitions in the section titled "other uses of the term". For example: One common practice of high-frequency traders (HFT) is a form of front running, where they peer into various exchanges and try to detect orders as they propagate from a broker's order router. That's not front running by its traditional definition. But that's probably one way that Virtu makes money. The English language (or is it the American language?) is not static. Words change meaning all the time. E.g. take the word "gay". Once it meant happy, then it became a pejorative, and most recently it has been embraced by the LGBT community. That word sure has changed meanings over the years. Rather, it probably has retained all of those meanings. https://en.wikipedia.org/wiki/Gay https://en.wikipedia.org/wiki/Gay Edit: forgot to add this: I would suggest that simply processing and executing orders quickly on the basis of public information is not sufficient. Here's an example of using what should be non-public information. Various exchanges, who investors reasonably thought were working on behalf of investors, in the public interest, were instead working for HFTs (from whom they made the most money). Hence "flash" orders, where an exchange would take an order it received from the public and "flash" or show it to its HFT buddies.[1] I don't know if the SEC finally banned that. How did receipt of my order at an exchange turn into "public" information ahead of its execution? [1] http://www.wsj.com/articles/SB124940289965505053 http://www.wsj.com/articles/SB124940289965505053