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In this case, it’s the influence AP has on markets. If I had published a similar tweet on my personal account, no one would’ve cared, least of all Wall Street.

In this case, it’s the influence AP has on markets. If I had published a similar tweet on my personal account, no one would’ve cared, least of all Wall Street. That’s not to say Twitter as a whole isn’t changing the way traders get their information. A Twitter feed with select authors is being integrated with Bloomberg terminals[1], we learned a couple of weeks a go. As for high frequency trading, that is certainly a part of the problem, just as online security and sloppy reporting. I’m very much in favor of a financial transaction tax added to every trade to discourage high frequency trading[2]. [1] http://venturebeat.com/2013/04/04/wall-street-meet-twitter-now-on-those-fancy-bloomberg-terminals/ http://venturebeat.com/2013/04/04/wall-street-meet-twitter-n... [2] http://blogs.reuters.com/felix-salmon/2012/08/06/chart-of-the-day-hft-edition/ http://blogs.reuters.com/felix-salmon/2012/08/06/chart-of-th...

ramchip 14y ago
Then won't you get mostly the same thing, at a higher spread? Market makers would be hurt less by that than the investing public... in fact exchanges give fee rebates to market makers precisely to help liquidity.
- Samuel_Michon 14y ago
  I think that’s a matter of implementation. In my ideal scenario, market makers would be out of business. This is hardly a new idea, and it is clear the system needs to be improved. From Wikipedia: “Keynes was among the first proponents of a securities transaction tax. In 1936 he proposed that a small tax should be levied on dealings on Wall Street, in the United States, where he argued that excessive speculation by uninformed financial traders increased volatility. For Keynes, the key issue was the proportion of 'speculators' in the market, and his concern that, if left unchecked, these types of players would become too dominant” http://en.wikipedia.org/wiki/Financial_transaction_tax#Securities_transaction_tax http://en.wikipedia.org/wiki/Financial_transaction_tax#Secur...
  - phyalow 14y ago
    Please elaborate on your "implementation". The way I see it any implementation of a tax would sorely affect: Resiliency of price discovery at certain quantum's, Depth, Immediacy of execution (whether mechanical or economic) and breadth of liquidity. Not to mention massive compliance overheads and loss of efficiency in the middle office. Such a tax could in theory only be implemented on lit exchanges! More volume would move to the dark ATS'S/ECN's and Crossing networks. Shit people would just internalize and cross order flows and never actually execute a "trade". Making your solution pointless. Keynes hahahahaha.
  - gd1 14y ago
    Why on earth would you want market makers out of business?
  - VLM 14y ago
    LOL the problem with Keynes is during eras when he's not discredited people do whatever they want including the exact opposite of his ideas yet call it Keynesianism, and during the other eras (like now) when he's completely discredited that trashes his credibility about topics unrelated to his more famous ideas, like your tax idea. So quoting Keynes is pretty much a lose-lose situation regardless of era. A large part of his failure is assuming his so called "dominant financial speculators" and the government overall or at least the financial regulators would not simply merge, which they've done. Therefore even if his tax was a good idea instead of an inherently dumb one, rather than being implemented correctly it would just be another crony capitalism weapon probably wielded exclusively as a club to pound down the "wrong" people, it would hardly be used to control the dominant financial speculators because they're the guys who purchased the elected officials to begin with!
  - chollida1 14y ago
    I can't see the rational as to why you think that Market makers are a problem. You could argue that High frequency traders and other hedge funds might be a problem for the market but to lump the market makers in with the high frequency or even prop shop funds i think is being a little harsh to them. What don't you like about the lowly market makers? Hell the Canadian option market would be a lonely place without them:)
ysekand 14y ago
But what I find worrying is exactly that, AP's influence on markets. I find it troubling that a single news organization could wield so much soft power. With regards to Bloomberg terminals, I am aware of their Twitter integration but again I question their decision. Twitter is not a reliable source of information, particularly for financial markets. If they go ahead with this, organized criminals and crackers can stage such attacks to make huge profits in minutes - buy low, sell high.
- VLM 14y ago
  To see the future, look at the past. You've just described the fax and email penny stock spam model which was popular maybe 10-20 years ago. Now no one is dumb enough to take stock advice from emails/faxes especially about penny stocks. It is extremely likely in the future once/if "everyone knows" twitter (and/or AP) is nothing but spam/scam, then it'll be ignored for financial news. I wouldn't worry too much about the ecosystem having crooks, they've always been there. I would worry if they're scientifically proven to be getting out of ecologically sound ratios.
phyalow 14y ago
It's nothing to do with "high frequency" or high volume trading. It's grounded in the fact that firms base their trading strategy on scraped sentiment and macro news. When a delta occurs between reality and signal input all hell breaks loose. All of which has nothing to do with the speed at which trades are submitted and executed. A financial tax is laughable. That would truly impede market efficiency, a much better approach would be to mandate a minimum holding time of each order in the ELOB say 1000 micros before it can be amended or canceled.
Houshalter 14y ago
>As for high frequency trading, that is certainly a part of the problem, just as online security and sloppy reporting. I’m very much in favor of a financial transaction tax added to every trade to discourage high frequency trading[2]. Wtf, why? High frequency trading doesn't hurt anyone. If the HFT end up making bad trades, they lose money to the people that don't.

ramchip 14y ago

Then won't you get mostly the same thing, at a higher spread? Market makers would be hurt less by that than the investing public... in fact exchanges give fee rebates to market makers precisely to help liquidity.

Samuel_Michon 14y ago
I think that’s a matter of implementation. In my ideal scenario, market makers would be out of business. This is hardly a new idea, and it is clear the system needs to be improved. From Wikipedia: “Keynes was among the first proponents of a securities transaction tax. In 1936 he proposed that a small tax should be levied on dealings on Wall Street, in the United States, where he argued that excessive speculation by uninformed financial traders increased volatility. For Keynes, the key issue was the proportion of 'speculators' in the market, and his concern that, if left unchecked, these types of players would become too dominant” http://en.wikipedia.org/wiki/Financial_transaction_tax#Securities_transaction_tax http://en.wikipedia.org/wiki/Financial_transaction_tax#Secur...
- phyalow 14y ago
  Please elaborate on your "implementation". The way I see it any implementation of a tax would sorely affect: Resiliency of price discovery at certain quantum's, Depth, Immediacy of execution (whether mechanical or economic) and breadth of liquidity. Not to mention massive compliance overheads and loss of efficiency in the middle office. Such a tax could in theory only be implemented on lit exchanges! More volume would move to the dark ATS'S/ECN's and Crossing networks. Shit people would just internalize and cross order flows and never actually execute a "trade". Making your solution pointless. Keynes hahahahaha.
- gd1 14y ago
  Why on earth would you want market makers out of business?
- VLM 14y ago
  LOL the problem with Keynes is during eras when he's not discredited people do whatever they want including the exact opposite of his ideas yet call it Keynesianism, and during the other eras (like now) when he's completely discredited that trashes his credibility about topics unrelated to his more famous ideas, like your tax idea. So quoting Keynes is pretty much a lose-lose situation regardless of era. A large part of his failure is assuming his so called "dominant financial speculators" and the government overall or at least the financial regulators would not simply merge, which they've done. Therefore even if his tax was a good idea instead of an inherently dumb one, rather than being implemented correctly it would just be another crony capitalism weapon probably wielded exclusively as a club to pound down the "wrong" people, it would hardly be used to control the dominant financial speculators because they're the guys who purchased the elected officials to begin with!
- chollida1 14y ago
  I can't see the rational as to why you think that Market makers are a problem. You could argue that High frequency traders and other hedge funds might be a problem for the market but to lump the market makers in with the high frequency or even prop shop funds i think is being a little harsh to them. What don't you like about the lowly market makers? Hell the Canadian option market would be a lonely place without them:)

ysekand 14y ago

But what I find worrying is exactly that, AP's influence on markets. I find it troubling that a single news organization could wield so much soft power. With regards to Bloomberg terminals, I am aware of their Twitter integration but again I question their decision. Twitter is not a reliable source of information, particularly for financial markets. If they go ahead with this, organized criminals and crackers can stage such attacks to make huge profits in minutes - buy low, sell high.

VLM 14y ago
To see the future, look at the past. You've just described the fax and email penny stock spam model which was popular maybe 10-20 years ago. Now no one is dumb enough to take stock advice from emails/faxes especially about penny stocks. It is extremely likely in the future once/if "everyone knows" twitter (and/or AP) is nothing but spam/scam, then it'll be ignored for financial news. I wouldn't worry too much about the ecosystem having crooks, they've always been there. I would worry if they're scientifically proven to be getting out of ecologically sound ratios.

phyalow 14y ago

It's nothing to do with "high frequency" or high volume trading. It's grounded in the fact that firms base their trading strategy on scraped sentiment and macro news. When a delta occurs between reality and signal input all hell breaks loose. All of which has nothing to do with the speed at which trades are submitted and executed. A financial tax is laughable. That would truly impede market efficiency, a much better approach would be to mandate a minimum holding time of each order in the ELOB say 1000 micros before it can be amended or canceled.

Houshalter 14y ago

>As for high frequency trading, that is certainly a part of the problem, just as online security and sloppy reporting. I’m very much in favor of a financial transaction tax added to every trade to discourage high frequency trading[2]. Wtf, why? High frequency trading doesn't hurt anyone. If the HFT end up making bad trades, they lose money to the people that don't.