3 ms·

You can still gauge supply and demand -- but you would do so using actual trades, and not unfulfilled orders. This is how pricing works in most markets, by ana

You can still gauge supply and demand -- but you would do so using actual trades, and not unfulfilled orders. This is how pricing works in most markets, by analyzing transactions, not offers. It seems to me that a law that hinges on proving the intent of the trader seems destined for failure. It looks like this guy got caught by his incriminating emails and not based on his actual trading. I like your idea of de-anonymized trades. Perhaps it could be something like the blockchain ledger.

kasey_junk 12y ago
> You can still gauge supply and demand -- but you would do so using actual trades This actually happens a lot in some venues, especially dark pools. This leads to pretty high bid/ask spreads and lowered liquidity. > It seems to me that a law that hinges on proving the intent of the trader seems destined for failure. Which is the primary argument for making it legal in my mind, because a law that is unenforced only penalizes honest market participants. Another option would be to dramatically increase the cost of the punishment. Another big problem is that even the idea of "intent" is in question when it comes to algorithmic trading. Absent a code comment //spoofing goes here or an email it seems like you are getting into deep philosophical territory. > I like your idea of de-anonymized trades. To be fair, there are lots of problems with it. Big block traders would absolutely hate this as it would give market makers such an advantage. Tracking reputation would become yet another advantage of sophisticated market participants that would be largely unavailable (or expensive) to other participants. Further, nothing would prevent reputation gaming, and detecting it may be even harder than spoofing. Basically anything that increases the bid/ask spread is likely to benefit market makers at the expense of the rest of the market and simplicity is a huge virtue.
bd_at_rivenhill 12y ago
This is exactly the case, and it's why "painting the tape" has rightfully been illegal for quite some time.

kasey_junk 12y ago

> You can still gauge supply and demand -- but you would do so using actual trades This actually happens a lot in some venues, especially dark pools. This leads to pretty high bid/ask spreads and lowered liquidity. > It seems to me that a law that hinges on proving the intent of the trader seems destined for failure. Which is the primary argument for making it legal in my mind, because a law that is unenforced only penalizes honest market participants. Another option would be to dramatically increase the cost of the punishment. Another big problem is that even the idea of "intent" is in question when it comes to algorithmic trading. Absent a code comment //spoofing goes here or an email it seems like you are getting into deep philosophical territory. > I like your idea of de-anonymized trades. To be fair, there are lots of problems with it. Big block traders would absolutely hate this as it would give market makers such an advantage. Tracking reputation would become yet another advantage of sophisticated market participants that would be largely unavailable (or expensive) to other participants. Further, nothing would prevent reputation gaming, and detecting it may be even harder than spoofing. Basically anything that increases the bid/ask spread is likely to benefit market makers at the expense of the rest of the market and simplicity is a huge virtue.

bd_at_rivenhill 12y ago

This is exactly the case, and it's why "painting the tape" has rightfully been illegal for quite some time.