4 ms·

I am genuinely curious how its possible to keep track of 'insider trading'. There is always information asymmetry and people will make decisions on that info,

I am genuinely curious how its possible to keep track of 'insider trading'. There is always information asymmetry and people will make decisions on that info, thats the entire premise of the market.

busterarm 10y ago
People with inside knowledge use leveraged trades (options) to maximize their gains. The volume of options traded is way lower than you probably imagine. Most options trades are fairly standard things -- it's mostly pattern recognition. And they're still doing this with really old tech (I hope you enjoy AS400s) and spreadsheets because there's no willpower to investigate these things for real. You could use modern computers and tools to do a lot of the job and spot patterns (the kind of stuff Nanex likes to do) and bring them to the intention of investigators but they don't do that. It's old school investigative work otherwise and most criminals are super dumb. Like all of a sudden a housekeeper in Romania is trading several hundred thousand in options the day before some news...
- toomuchtodo 10y ago
  Really shocked the SEC doesn't cut Nanex/Eric a check to provide this sort of data directly to them.
  - busterarm 10y ago
    Really though? SEC and FINRA are cush jobs. If you play politics and make it high enough you can golden parachute out of there. There isn't the political will to give these agencies any real teeth. They go after the low hanging fruit because it's easy and won't make waves. It's practically their mandate. Catch idiots and keep the mafia stuck in OTC and it's a job well done. It's like civil service but with better pay and zero accountability. Everything's fine, nothing to see here.
    - toomuchtodo 10y ago
      Rage intensifies.
- im3w1l 10y ago
  > It's old school investigative work otherwise and most criminals are super dumb. Selection bias, since you don't know about the criminal you didn't catch.

I am genuinely curious how its possible to keep track of 'insider trading'. There is always information asymmetry and people will make decisions on that info, thats the entire premise of the market.

busterarm 10y ago

People with inside knowledge use leveraged trades (options) to maximize their gains. The volume of options traded is way lower than you probably imagine. Most options trades are fairly standard things -- it's mostly pattern recognition. And they're still doing this with really old tech (I hope you enjoy AS400s) and spreadsheets because there's no willpower to investigate these things for real. You could use modern computers and tools to do a lot of the job and spot patterns (the kind of stuff Nanex likes to do) and bring them to the intention of investigators but they don't do that. It's old school investigative work otherwise and most criminals are super dumb. Like all of a sudden a housekeeper in Romania is trading several hundred thousand in options the day before some news...

toomuchtodo 10y ago
Really shocked the SEC doesn't cut Nanex/Eric a check to provide this sort of data directly to them.
- busterarm 10y ago
  Really though? SEC and FINRA are cush jobs. If you play politics and make it high enough you can golden parachute out of there. There isn't the political will to give these agencies any real teeth. They go after the low hanging fruit because it's easy and won't make waves. It's practically their mandate. Catch idiots and keep the mafia stuck in OTC and it's a job well done. It's like civil service but with better pay and zero accountability. Everything's fine, nothing to see here.
  - toomuchtodo 10y ago
    Rage intensifies.
im3w1l 10y ago
> It's old school investigative work otherwise and most criminals are super dumb. Selection bias, since you don't know about the criminal you didn't catch.