2015 Finance Rankings | The Financial Engineer.
Hofstra’s Master of Science in Finance program is ranked 43rd nationally by The Financial Engineer. One of the more successful tracks of Zarb’s MS Finance program is its Risk Management concentration. Dr. Karagozoglu hopes that this success will encourage financial regulators – the SEC, CFTC, OCC, FINRA and the Fed- as well as the exchanges to hire top ranked risk management degree holders from Hofstra University’s Zarb School of Business.
FINRA addressing market risks: HFT, Algo’s, CARDS, CAT & dark pools*
Carlo di Florio Remarks at NSCP 2014 National Conference – FINRA.
In Lexelogy.com*, Thomas K. Potter, III of Burr & Forman LLP discusses Carlo DiFlorio’s, FINRA’s Chief Risk Officer and Head of Strategy, remarkes at “the annual meeting of the National Society of Compliance Professionals Monday that FINRA is emphasizing efforts to mitigate market risks, even as it regards US capital-market integrity as at its strongest historically.
HFT & Algorithmic Trading: DiFlorio addressed thee initiatives. First, FINRA examiners are focusing on firms’ supervision of HFT and algorithmic trading, including pre-implementation testing and firm-wide “kill switch” procedures when something goes awry. Second, FINRA’s Board decided at its September meeting to propose a rule requiring FINRA registration by those who develop, design or significantly modify trading algorithms. The Staff is drafting a proposed rule for comment. Third, FINRA is working on additional guidance on existing supervisory obligations for algorithmic trading. Market Surveillance & Big Data: FINRA also is working to boost its market-surveillance capabilities. FINRA’s surveillance systems monitor for 29 cross-market patterns attuned to 55 threat scenarios. When current initiatives are complete, FINRA surveillance will cover 90% of markets. Second, FINRA is one of final bidders under consideration by the SEC for a new Consolidated Audit Trail (“CAT”) processor to improve “data mining” of information across markets. Third, FINRA is working to increase transparency of dark-pool and other alternative markets, including expanding FINRA’s disclosure of Alternative Trading System (“ATS”) volume data. Fourth, FINRA’s second CARDS (comprehensive automated risk data system) proposal is out for comment until December 1. The proposed Rule would standardize and automate a broad range of securities account and transaction data from clearing (and later fully disclosed introducing) firms. It is another effort to assemble more easily mined “big data” for industry-wide surveillance and compliance.”
Speed trader fined $1 million for Nasdaq manipulation scheme.
Dr. Ahmet Karagozoglu says this closing price manipulation reminds him why closing prices are different from settlement prices in futures markets. In light of Athena Capital Research LLC case he suggests that, to prevent closing price manipulation in stock markets, regulators and stock changes should learn from the rules of futures exchanges.
Historically, futures exchanges in the U.S. and abroad have been concerned about potential manipulation of closing prices each trading day. Since margin accounts are marked-to-market at the end of each trading day, exchanges had established rules to prevent the negative effect of unfounded quotes and trades during the closing minutes (seconds) of trading on the margin account settlements. Thus, we have both closing and settlement price in futures markets. Exchange rules describe how the end-of-day settlement prices are determined in order to prevent closing price manipulations which are attempted to generate unfair margin profits.
Securities and Exchange Commission (SEC) says with “high-powered computers, complex algorithms and rapid-fire trades,” the New York-based firm tainted closing prices used by fund managers to track their performance.
Watching the U.S. Senate’s the Permanent Subcommittee On Investigations Hearing: Conflicts of Interest, Investor Loss of Confidence, and High Speed Trading in U.S. Stock Markets
Senator Ron Johnson: “Where do you get your data?” (in referring to the analysis of order execution costs)
Robert H. Battalio, Professor of Finance, University of Notre Dame: “From a major ibank (investment bank). We don’t have detailed/good data.”
Dr.K: Regulators/policy makers should have a record of all the transactions in financial markets so that their natural duty of ‘market oversight’ is easier to handle. In that case, academic researchers and regulators won’t have difficulty answering questions ‘what happened?’.
Senator John McCain: “Michael Lewis in his excellent book and 60 Minutes interview said markets are rigged. Are they?”
Bradley Katsuyama, President & CEO of IEX Group, Inc: Word ‘rigged’ may be used to describe markets.
Dr.K: Best marketing campaign for IEX exchange.
Watching the U.S. Senate’s the Permanent Subcommittee On Investigations Hearing: Conflicts of Interest, Investor Loss of Confidence, and High Speed Trading in U.S. Stock Markets
Senator John McCain: SEC’s Reg NMS should be changed.
Dr.K: Reg NMS was supposed bring “best price” execution to the equity markets. If advances in technology and market structure changes result in different outcome from the intended consequences of regulation, this does not mean that the new practices, i.e. HFT as Senator McCain suggested, are “bad”. It just suggests that policy/regulation is slow in their oversight of the markets. And law makers referring to the book “Flash Boys” by Michael Lewis as one of their reasoning for a hearing also suggests that regulation/policy making is reactive as opposed to proactive.
Senator Carl Lewin: High Frequency Traders have predatory practices. Co-location is not fair.
Dr.K: Exchanges create the trading structure within the current regulations and given that market structure any trading practice which appears to be taking advantage of opportunities should not be blamed. Co-locating one firm’s server, by purchasing space sold by the exchange, next to that exchange’s matching server is no different than a firm or individual becoming a member (by purchasing a seat) of the exchange and stand on the floor next to specialist to transact during the “floor trading” days.
High-Speed Trading to Be Examined by Levin at Hearing Next Week
By Cheyenne Hopkins, Bloomberg, Jun 9, 2014 6:02 PM ET
“…computerized and algorithmic traders who account for about half of U.S. stock trades. Traders like those highlighted by Michael Lewis in his book “Flash Boys” have been linked by critics to a May 2010 stock-market disruption…”
Bloomberg reporter Cheyenne Hopkins uses an unbiased and appropriate description, i.e. “a May 2010 stock-market disruption” in referring to the events of May 6, 2010, that became known as the “Flash Crash”. I sincerely thank Cheyenne Hopkins!
An unprecedented rapid decrease AND increase, by more than 5% in each direction, within 20 minute time period between 2:32 PM and 2:52 PM ET was experienced in the U.S. stock market, i.e. in E-mini S&P 500 stock index futures prices.
SEC Chair Mary Jo White chimes in on HFT. Text of SEC Chair’s June 5 speech
Futures Magazine, June 6, 2014 By Mary Jo White
Enhancing Our Equity Market Structure
SEC Chair Mary Jo White speaking at the Sandler O’Neill & Partners, L.P. Global Exchange and Brokerage Conference in New York, N.Y.
SEC does job, ignores HFT noise.
Futures Magazine June 6, 2014 FUTURES OP-ED By Matt Levine, Bloomberg
Matt Levine writes “I’ve said this before, but I really admire the way the Securities and Exchange Commission has responded to the recent uproar about high-frequency trading. A lesser regulator would have jumped on the bandwagon of HFT bashing, or even tried to get out ahead of it with its own anti-HFT branding.” To read more click on the article link above.
SECs White gains praise from HFTs: Really.
Futures Magazine June 6, 2014 By Daniel P. Collins
Ever since Michael Lewis’ book, “Flash Boys: A Wall Street Revolt” came out traders in general and high frequency traders in particular have been nervous about the regulatory response.
There was fear of a knee jerk response that could harm, or even end their business. So Securities and Exchange Commission Chair Mary Jo White’s comments this week at the Sandler O’Neill Global Exchange and Brokerage Conference were much anticipated. To read more click on the article link above.
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