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Archive for the ‘Joe Saluzzi’ Category

Joe Saluzzi: “The Man in the Arena”

Posted by Larry Doyle on June 24th, 2010 2:28 PM |

As a result of launching Sense on Cents, I have had the good fortune of developing quality relationships with a wide array of individuals across a wide swath of our economic landscape. One of those individuals I hold in especially high regard is Themis Trading’s Joe Saluzzi.

I have interviewed Joe twice on No Quarter Radio’s Sense on Cents with Larry Doyle (August 2, 2009 and then again on May 23, 2010).  Joe is a breath of fresh air in that he ALWAYS tells it like it is. He provides total truth, transparency, and integrity at each and every turn. He has opened doors and shed sunlight on the destructive elements embedded in high frequency trading. He pulls no punches in offering an honest assessment of the markets and the economy. He is uniquely positioned to provide a wealth of sense on cents. Unlike many in the industry, Joe asks for no cover and provides none for those more inclined to operate in the dark corners and amidst the shadows on Wall Street. (more…)

Financial Times Highlights Great American Joe Saluzzi

Posted by Larry Doyle on May 26th, 2010 12:31 PM |

Confidence in the markets and the economy is ultimately a function of truth, transparency, and integrity.

The reason global investors have such little confidence currently is due to the very simple fact that both the financial industry and their government counterparts have not promoted practices which embrace these cherished principles.

That is not to say that each and every individual in the financial industry or in government does not try to promote these values. In fact, I believe the overwhelming majority of people on Wall Street and in the global markets do embrace these values, but they are not in a position to speak out when the principles are violated. I love it when I come across people who possess the courage and are unencumbered to speak out for the truth, transparency, and integrity our markets, our country, and our world so badly need. Like who? (more…)

Joe Saluzzi Exposes ‘Theft on Wall Street’

Posted by Larry Doyle on May 14th, 2010 9:17 AM |

Themis Trading’s Joe Saluzzi was designated a Sense on Cents Hall of Fame medalist this past January. Mr. Saluzzi has once again distinguished himself by providing a significant degree of transparency into the technical structures of our seriously flawed equity exchanges.

A recently released white paper, Exchanges and Data Feeds: Data Theft on Wall Street,written by Joe and his colleague Sal Arnuk at Themis Trading is getting a LOT of attention on Wall Street and in Washington. I welcome highlighting and bringing this 3-page paper to Main Street. If you have any interest in the markets and our economy, this paper is a MUST read. Allow me to whet your appetite: (more…)

Banning Flash Orders Should be Just a Start

Posted by Larry Doyle on September 18th, 2009 9:25 AM |

Joe Saluzzi of Themis Trading deserves special recognition for yesterday’s announcement by the SEC that it will propose the banning of flash orders. Why? Joe had the character and courage of his conviction to publicly highlight the inherent inequity involved in this corner of our economic landscape.

I have highlighted Joe’s work extensively here at Sense on Cents.  I do not speak for Joe, but I think he would agree that banning flash orders should only be the start to level the playing field on our equity exchanges. What other initiatives should be undertaken to promote a greater degree of transparency and integrity on our equity exchanges? I would promote the following:

1. Work with regulators overseas so that uniform measures are practiced across all global equity exchanges. The Europeans are certainly not bashful in highlighting shortcomings in American compensation practices within the financial industry. American regulators should work with these European central bankers so there is no ‘exchange arbitrage.’

2. Eliminate a ‘payment for order flow’ (otherwise known as rebates) for directing business to one exchange versus another. In layman’s terms, these rebates are known as ‘kickbacks.’ Be mindful that the London Stock Exchange stopped allowing rebates as of September 1st.

3. Eliminate ‘predatory algorithmic trading’ which also preys upon retail orders. Distinguish between qualified algorithmic trading versus predatory algorithmic trading.

4. Thoroughly review the integrity of dark pools which impacts liquidity.

In short, it is readily apparent that the SEC has allowed for the development and execution of a variety of trading practices which have not served the interests of EVERY investor. Why and how did this develop? The exchanges have become for profit enterprises. There is nothing inherently wrong with for profit exchanges. That said, there is plenty wrong with unfair trade practices promoted by exchanges and not properly overseen by the regulators.

I am baffled as to how trade practices, such as flash orders, do not seemingly have to withstand a rigorous review PRIOR to their being rolled out. Is the development and implementation of flash orders not the equivalent of a new drug hitting the market prior to being officially reviewed and approved by the FDA? What is wrong with this picture?  In my opinion, once again the regulators have been exposed as more aligned with the financial industry than they are with fulfilling their mandate to protect investors.

These regulators should not be allowed to take a victory lap for banning flash orders without addressing the entire gamut of unfair trade practices currently polluting our equity exchanges.


Related Sense on CentsCommentary:
   Review of Sense on Cents Interview with Joe Saluzzi on High Frequency Trading (August 3, 2009)
   Is Uncle Sam Manipulating the Equity Markets? (July 1, 2009)

Review of Sense on Cents Interview with Joe Saluzzi on High Frequency Trading

Posted by Larry Doyle on August 3rd, 2009 8:38 AM |

Joe Saluzzi

For those unable to listen to my interview regarding high frequency trading with Joe Saluzzi of Themis Trading, I hope this timeline review of the questions asked and topics covered proves helpful.

I strongly encourage anybody interested in the nature of our markets today to listen to this interview in its totality. Joe provides a wealth of riveting information. In the spirit of balanced journalism, I believe I took a fair approach in my discussion with Joe; I have already reached out to people within the HFT community to invite them on the show. I hope they take me up on my offer.

As we move forward on our economic landscape, I hope this interview will serve as a significant informational resource.

To access Joe’s insights on specific topics, simply point and click on the audio player bar (provided at the end of this post) to the particular minute and second referenced. I apologize for the technical difficulties during the first 8 minutes, 56 seconds of the show. The timeline below picks up the broadcast at the start of the show which begins at the 8 minute, 57 second mark:

8 minutes, 57 seconds – Welcome and introduction.

11 min, 45 sec – What is Regulation NMS and what impact has it had on the marketplace?

13 min, 30 sec – How has the pricing of stocks in decimals impacted trading?

14 min – What is ‘displayed liquidity?’

14:30 – Historical transition from obligatory market making of specialists to high frequency trading.

16:30 – Definition of HFT terms, including: algorithmic trading, predatory algorithms, dark pools, ECNs, flash orders.

21:30 – How do equity exchanges work? Nature of two-tiered markets and the inherent conflict of interests exchanges have as for profit entities. Overall level of confidence in exchanges.

24:45 – Call for an independent commission to investigate exchange operations.

25:55 – What is co-location and how does it impact equity trading?

27:15 – What is naked access and how does it impact equity trading?

29:30 – LD plays devil’s advocate and challenges Mr. Saluzzi about benefit of narrower spreads versus the costs to investors. Joe delineates volume and churning versus true liquidity.

32:30 – Further color on exchange volume which is heavily dominated by high frequency trading. Market analysts estimate that upwards of 70% of equity trading is driven by high frequency traders who represent 2% of market participants!!

34:00 – What risks are taken by high frequency traders? How are these risks mitigated?

36:20 – Could HFT manipulate the market? Does HFT present systemic risk? Were oil markets manipulated?

39:50 – Is HFT a violation of the Sherman Anti-Trust Act?

41:00 – Mr. Saluzzi highlights that as of September 1st, the London Stock Exchange will no longer issue rebates for liquidity providers. Joe recommends the same for our exchanges.

41:50 – Discussion of regulatory oversight of exchange activities.

44:15 – How should retail investors adapt to trading and investing in the presence of HFT? Should they utilize limit orders? Market orders?

47:20 – Do vendors sell HFT software or do individuals develop their own software code?

48:20 – How do we compel regulators to embrace technological advancements while maintaining a fair and balanced playing field?

50:20 – Comparing electronic trading in the bond market to the equity market.

51:25 – Impact of putting a speed limit on the equity highway. That is, what would happen if all orders were good for a 1- second time requirement while exchanges eliminated flash orders and rebates.

53:25 – What is the risk or potential that HFT could crash the market? What is pushing the market higher currently?

55:00 – Overview on market, and desire for integrity in the marketplace.


Instructions: Once you’ve clicked on the “Play” button to begin the playback, point and click on the audio player bar to the particular minute and second referenced for each topic (or listen to the entire show…it’s worth it!!). Remember, the show does not begin until the 8 minute, 57 second mark.

Once again, I thank Mr. Saluzzi for elevating the debate and dialogue on this topic and our markets in general.

I hope anybody reading this commentary and listening to my interview with Mr. Saluzzi finds it truly beneficial. If so, please share it with friends and colleagues.

Additionally, please follow all of my work via Twitter, Facebook, an RSS feed, or preferably by e-mail delivery. All links are provided at the top of the page or in the right sidebar.

Comments, questions, constructive criticism always appreciated.


Related Sense on Cents Commentary:

Is Uncle Sam Manipulating the Equity Markets?
– Mr. Saluzzi addresses questionable nature of high frequency trading on Bloomberg. (July 1, 2009)

Is Uncle Sam Manipulating the Equity Markets? Part II
– Sergey Aleynikov is arrested for stealing high frequency software from Goldman Sachs. (July 6, 2009)

Is Uncle Sam Manipulating the Equity Markets? Part III
– Joe Saluzzi addresses possibility of market manipulation via high frequency trading. (July 8, 2009)

Wall Street Has a Problem as High Frequency Trading Moves to Main Street
The New York Times writes a lead article on high frequency trading. (July 24, 2009)

High Frequency Trading Debate: Mano a Mano
– Joe Saluzzi and Irene Aldrich of Able Alpha Trading engage in a debate on CNBC. (July 24, 2009)

Wall Street Has a Problem as High Frequency Trading Moves to Washington
– Senator Chuck Schumer (D-NY) announces he will move to limit flash orders if the SEC does not take action. (July 27, 2009)

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