5 ms·

Front Running is illegal, and companies get busted and fined for doing that. High Frequency trading is actually GOOD for retail investors because it reduces sp

Front Running is illegal, and companies get busted and fined for doing that. High Frequency trading is actually GOOD for retail investors because it reduces spreads and increases liquidity.

FriendlyNormie 6y ago
Found the Jew.
cbozeman 6y ago
No it isn't. You know why front running isn't illegal? Because it keeps happening and companies keep getting fined for it. A "law" that allows you a merely pay a fine isn't a law, its a revenue-generating procedure. Murder is illegal. You can't pay $500,000 to the authorities and then go on about your business. For a law to have any weight, you have to be inconvenienced regardless of your financial status.
- koheripbal 6y ago
  > You know why front running isn't illegal? Because it keeps happening and companies keep getting fined for it. This is not a logical sentence. They are obviously getting fined because it's illegal. The traders involved are also terminated, fyi. All banks are required to submit automated reports on Front Running detection algorithms daily to the regulators. Every trade is evaluated by the compliance systems. If you think the fines are not big enough or that the algorithms are missing things, then make that more logical argument. Stay away from hyperbole because it discredits you.
  - _jal 6y ago
    > If you think the fines are not big enough With crimes like these, it is nearly definitional. It is trivial to put a price on the value of an action like this; if the fine for the action is less than it grosses, it is just a tax.
    - mLuby 6y ago
      > if the fine for the action is less than it grosses, it is just a tax. And not just the actions regulators catch, but the others too. do { new Crimes() } while ( fine(Crimes.detected) < profit(Crimes.all) )
  - berns 6y ago
    > This is not a logical sentence It's illegal by definition. But since they can pay a fine for a net gain, you can say that they legally profit from doing something illegal.
    - koheripbal 6y ago
      Which is why the fines are always greater than the net gains. Obviously. Do you think the SEC is full of morons?
      - pueblito 6y ago
        I’m sure the SEC is full of extremely intelligent and well educated people. I’m equally sure that most of them are corrupt and are part of the revolving door.
      - girvo 6y ago
        That’s only true if the SEC catches all instances of it by a particular company, no?
      - cbozeman 6y ago
        > Which is why the fines are always greater than the net gains. The $3 billion in fines Wells Fargo paid versus the multiple billions it made from 2002-2015. The bank has almost $2 trillion in assets as of 2020. > Do you think the SEC is full of morons? No, worse. Cowards. Entirely too many see the SEC as a pathway to a high-paying job on Wall Street. You learn the ins and outs of compliance and go from a GS-8 - GS-13 making $70,000 - $150,000 a year, to making $1 million a year helping these banks, hedge funds, and other investors sidestep regulations by the most narrow of line-toeing.
        koheripbal 6y ago
        > $3 billion in fines Wells Fargo paid This had ZERO to do with Front Running.
- smabie 6y ago
  What fines? No real firms front run. Market makers are not front running your orders. This does not happen
  - ironyman 6y ago
    There's a lot of victimhood mentality going on right now. Everything is being blamed on Wall Street and market makers 'ripping off the little guys'. I believe you 100% but sadly you're not going to get through to them.
cwhiz 6y ago
Ha! Not only does front running happen all the time, but high frequency trading is de facto legal front running. Just beat them on a shorter or faster wire. The whole thing is rigged.
- koheripbal 6y ago
  That isn't Front Running - by definition. Front Running is when you receive an order from a large client and you yourself trade in the same stock before them, and then sell the stock to them, or allow the spread to narrow and pocket the difference. High frequency trading is not front running unless it illegally takes data from the client trading desk - which would be both obvious and highly illegal.
  - cwhiz 6y ago
    There is a reason high frequency trading is typically referred to as legal front running. Sure, it's not front running by legal definition, but in practice it is absolutely front running. Beating trades to the market and making micro-gains on a mass scale.
    - growse 6y ago
      > There is a reason high frequency trading is typically referred to as legal front running. Sure, it's not front running by legal definition, but in practice it is absolutely front running. Beating trades to the market and making micro-gains on a mass scale. It's only referred that may by people who have no idea what they're talking about. Front running isn't about "beating" anyone to anything. It's about stealing non-public information about an actor's intent to trade and using it to make trades before that information becomes public, and specifically before that trade executes. It's the theft bit which is the reason it's illegal. What HFT firms are doing is simply rushing to execute as fast as possible on generally available information. They're not acting on information that's not legally available to everyone else, because that would be illegal misuse of that information. This sort of thing is pretty easy to detect, and the SEC comes down pretty hard on it.

Front Running is illegal, and companies get busted and fined for doing that. High Frequency trading is actually GOOD for retail investors because it reduces spreads and increases liquidity.

FriendlyNormie 6y ago

Found the Jew.

cbozeman 6y ago

No it isn't. You know why front running isn't illegal? Because it keeps happening and companies keep getting fined for it. A "law" that allows you a merely pay a fine isn't a law, its a revenue-generating procedure. Murder is illegal. You can't pay $500,000 to the authorities and then go on about your business. For a law to have any weight, you have to be inconvenienced regardless of your financial status.

koheripbal 6y ago
> You know why front running isn't illegal? Because it keeps happening and companies keep getting fined for it. This is not a logical sentence. They are obviously getting fined because it's illegal. The traders involved are also terminated, fyi. All banks are required to submit automated reports on Front Running detection algorithms daily to the regulators. Every trade is evaluated by the compliance systems. If you think the fines are not big enough or that the algorithms are missing things, then make that more logical argument. Stay away from hyperbole because it discredits you.
- _jal 6y ago
  > If you think the fines are not big enough With crimes like these, it is nearly definitional. It is trivial to put a price on the value of an action like this; if the fine for the action is less than it grosses, it is just a tax.
  - mLuby 6y ago
    > if the fine for the action is less than it grosses, it is just a tax. And not just the actions regulators catch, but the others too. do { new Crimes() } while ( fine(Crimes.detected) < profit(Crimes.all) )
- berns 6y ago
  > This is not a logical sentence It's illegal by definition. But since they can pay a fine for a net gain, you can say that they legally profit from doing something illegal.
  - koheripbal 6y ago
    Which is why the fines are always greater than the net gains. Obviously. Do you think the SEC is full of morons?
    - pueblito 6y ago
      I’m sure the SEC is full of extremely intelligent and well educated people. I’m equally sure that most of them are corrupt and are part of the revolving door.
    - girvo 6y ago
      That’s only true if the SEC catches all instances of it by a particular company, no?
    - cbozeman 6y ago
      > Which is why the fines are always greater than the net gains. The $3 billion in fines Wells Fargo paid versus the multiple billions it made from 2002-2015. The bank has almost $2 trillion in assets as of 2020. > Do you think the SEC is full of morons? No, worse. Cowards. Entirely too many see the SEC as a pathway to a high-paying job on Wall Street. You learn the ins and outs of compliance and go from a GS-8 - GS-13 making $70,000 - $150,000 a year, to making $1 million a year helping these banks, hedge funds, and other investors sidestep regulations by the most narrow of line-toeing.
      - koheripbal 6y ago
        > $3 billion in fines Wells Fargo paid This had ZERO to do with Front Running.
smabie 6y ago
What fines? No real firms front run. Market makers are not front running your orders. This does not happen
- ironyman 6y ago
  There's a lot of victimhood mentality going on right now. Everything is being blamed on Wall Street and market makers 'ripping off the little guys'. I believe you 100% but sadly you're not going to get through to them.

cwhiz 6y ago

Ha! Not only does front running happen all the time, but high frequency trading is de facto legal front running. Just beat them on a shorter or faster wire. The whole thing is rigged.

koheripbal 6y ago
That isn't Front Running - by definition. Front Running is when you receive an order from a large client and you yourself trade in the same stock before them, and then sell the stock to them, or allow the spread to narrow and pocket the difference. High frequency trading is not front running unless it illegally takes data from the client trading desk - which would be both obvious and highly illegal.
- cwhiz 6y ago
  There is a reason high frequency trading is typically referred to as legal front running. Sure, it's not front running by legal definition, but in practice it is absolutely front running. Beating trades to the market and making micro-gains on a mass scale.
  - growse 6y ago
    > There is a reason high frequency trading is typically referred to as legal front running. Sure, it's not front running by legal definition, but in practice it is absolutely front running. Beating trades to the market and making micro-gains on a mass scale. It's only referred that may by people who have no idea what they're talking about. Front running isn't about "beating" anyone to anything. It's about stealing non-public information about an actor's intent to trade and using it to make trades before that information becomes public, and specifically before that trade executes. It's the theft bit which is the reason it's illegal. What HFT firms are doing is simply rushing to execute as fast as possible on generally available information. They're not acting on information that's not legally available to everyone else, because that would be illegal misuse of that information. This sort of thing is pretty easy to detect, and the SEC comes down pretty hard on it.