Joe Saluzzi of Themis Trading | Sense on Cents Sense on Cents

Posts Tagged ‘Joe Saluzzi of Themis Trading’

Attention All Traders and Investors: How Are You Getting Pimped? Here’s How….

Posted by Larry Doyle on January 6th, 2012 10:17 AM |

This commentary is a little lengthy, but for those involved in the markets as a trader or an investor I believe it is a great read. Please share it. LD

The other day I received a very interesting comment and question from a regular reader and active trader. This reader’s prompt compelled me to reach out to our Sense on Cents Hall of Fame legends Joe Saluzzi and Sal Arnuk at Themis Trading for a response.

If you are an active trader or an investor, I STRONGLY recommend you read this commentary. If you merely care about our markets and economy, I also STRONGLY recommend you read it.

Is this how capitalism works now? Is this the best America has to offer in terms of free market capitalism? Excuse me while I vomit. (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…)

Tags: BATS, Chi-Delta, Chi-X, dark pools in Europe, equity exchanges in America, Financial Times May 26 2010, flash crash, FT, hft, high frequency trading, Joe Saluzzi of Themis Trading, market transparency, MTFs on London Stock Exchange, NASDAQ, The Wall Street Journal, Trust in Dark Pools is Dented FT
Posted in Equity Markets, General, Joe Saluzzi | 1 Comment »

No Quarter Radio’s Sense on Cents Welcomes Back Joe Saluzzi

Posted by Larry Doyle on May 22nd, 2010 10:00 AM |

UPDATE: This episode of NQR’s Sense on Cents with Larry Doyle has concluded. You can listen to a recording of the episode in its entirety by clicking the play button on the audio player provided below. Once the audio begins, you can advance or rewind to any portion of the episode by clicking at any point along the play bar.

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What really happened in the markets on Thursday May 6th? Can regulators truly address the underlying issues that caused the ‘flash crash’ or are our equity exchanges fundamentally and structurally broken?

How can you protect yourself in the face of such unbelievable volatility? Who benefits and who loses in the face of this volatility?

Will circuit breakers proposed by regulators work? Will we witness more days like May 6th?

If you have any interest in our markets and our economy, you will not want to miss my show this Sunday evening from 8-9pm ET as No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Back Joe Saluzzi. >>>> (more…)

Tags: algorithmic trading, are the equity exchanges structurally broken, BATS, circuit breakers, flash crash, high frequency trading, Joe Saluzzi of Themis Trading, market volatility, NASDAQ, No Quarter Radio Sense on Cents with Larry Doyle, NYSE Euronext, what really happened on May 6th, will May 6th happen again
Posted in General, No Quarter Radio, Sense on Cents | 2 Comments »

Shedding Light on Dark Pools

Posted by Larry Doyle on October 20th, 2009 4:17 PM |

Kudos to Joe Saluzzi once again. While a number of people in the markets have been pushing for increased oversight of high frequency trading, in my opinion, nobody deserves more credit than Joe Saluzzi of Themis Trading. The pressure initiated by Joe and pushed by others is starting to bear real results. How so?

The highly predatory nature of ‘flash orders’ will likely be discontinued. Now we learn that trading activity in dark pools will also likely be seriously restricted. What are dark pools? Why should you care? If you have an interest in the markets, you should care. Let’s navigate.

I was honored to have Joe join me on August 2nd on No Quarter Radio’s Sense on Cents with Larry Doyle. From my review of that interview, we learned that dark pools have developed in the following manner:

– Originally launched by one or two exchanges for the purpose of allowing major money managers to cross large blocks of stock ‘off the floor’ and thus protect the buyers and sellers identities and the price of the transaction

– Now every dealer and exchange have developed dark pools resulting in more and more business occurring off exchanges and without any benefit of transparency. Who is disadvantged? Those without access to the dark pools.

– Dark pools initially had minimum size orders, but many dark pools have increasingly shifted away from a size requirement.

– Dark pools have developed in such a way that some market participants will abuse the intended purpose of the facility, that is to transact, and instead will look to discover information on pending orders through these dark pools. (more…)

Tags: Charles Schumer, crony capitalism, dark pool, Dark Pool Trade Limit Said to Be Cut 95% in SEC Plan, developments in dark pools, high frequency trading, how do dark pools work, Joe Saluzzi, Joe Saluzzi of Themis Trading, limits on trading in dark pools, SEC, Ted Kaufman, trading in dark pools, what is a dark pool
Posted in General, high frequency trading | 2 Comments »

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)

Tags: banning flash orders should be just a start, eliminate payment for order flow on equity exchanges, eliminate predatory algorithmic trading, eliminate rebates on equity exchanges, integrity of dark pools, Joe Saluzzi of Themis Trading, leveling the playing field on equity exchanges, London Stock Exchange has elimintaed rebates, make sure no arbitrage on equity exchanges, promoting transparency and integrity on equity exchanges, regulators aligned with Wall Street vs protecting investors, SEC has been negligent in overseeing equity exchange integrity, SEC should review trade practices prior to their being rolled out, SEC's banning of flash orders, unfair trade practices on equity exchanges, why should flash orders be banned
Posted in flash orders, General, Joe Saluzzi, SEC | 3 Comments »

Sense on Cents Interviews Joe Saluzzi Regarding High Frequency Program Trading

Posted by Larry Doyle on July 29th, 2009 7:07 AM |

High frequency program trading is the single hottest topic on Wall Street today. No individual has generated greater focus on this topic than Joe Saluzzi of Themis Trading.

I look forward to interviewing Mr. Saluzzi this Sunday evening, August 2nd from 8-9pm on NoQuarter Radio’s Sense on Cents with Larry Doyle.

This show will comprehensively cover the gamut of issues and topics involved in this highly controversial trading activity. Does high frequency program trading engage in front-running? Are retail and institutional investors disadvantaged? Are the exchanges and regulators looking the other way? What were the developments in the marketplace which brought us to this point?

NQR’s Sense on Cents with Larry Doyle will address these questions and more with the man ‘in the arena’ and at the center of the debate, Joe Saluzzi.

The show is available as a podcast on iTunes, and also archived in an audio player right here at Sense on Cents so it should serve as a tremendous informational resource as we continue to navigate the economic landscape.

Please share with friends and colleagues.

Editor’s Note, 8.03.09: For a full review of this broadcast, please visit Review of Sense on Cents Interview with Joe Saluzzi on High Frequency Trading.

Related Sense on Cents Commentary:

High Frequency Trading Debate: Mano a Mano (July 24, 2009)

Is Uncle Sam Manipulating the Equity Markets? (July 1, 2009)

Wall Street Has a Problem as High Frequency Trading Moves to Washington

Posted by Larry Doyle on July 27th, 2009 11:25 AM |

When a hot financial topic hits Main Street and there are political points to be scored or lost in the process, little wonder it quickly moves on to Washington. I speak of the increasing attention and focus on high frequency program trading.

The serious ethical, if not legal, concerns surrounding high frequency trading hit Main Street this past Friday with a lead article in the New York Times. I highlighted that article along with my extensive writings on this topic here at Sense on Cents in my piece “Wall Street Has a Problem as High Frequency Trading Moves to Main Street.”

Well, we awaken this morning to see the high frequency trading issue making waves in Washington. The Wall Street Journal reports In a Flash, Schumer Warns SEC:

Sen. Charles Schumer (D., N.Y.) told the Securities and Exchange Commission that he will move to limit “flash” orders for stocks if the agency takes no action against them.

The practice routes stock trades through private liquidity pools before being sent onto other exchanges for filling. Critics contend that flash ordering creates a two-tiered system of investors, where those with access get a better price than those without.

“If the SEC fails to curb this practice, I plan to introduce legislation in the U.S. Senate to prohibit the use of flash orders in connection with optional pre-routing programs in order to ensure that trading in U.S. public capital markets is fair and transparent for all market participants,” Sen. Schumer wrote Friday.

While on one hand I commend Schumer for being proactive on this front, I am reminded that he has been one of the largest beneficiaries of campaign contributions and lobbying dollars from the banks and hedge funds engaged in high frequency program trading. Without questioning Schumer’s motivations, is he taking action to curry public favor against his being linked so closely with Wall Street?

Additionally, the fact that Schumer or any other political representative needs to address this issue again brings into question the efficacy of the regulatory bodies charged with protecting investor interests. How can any observer of high frequency program trading believe the investor playing field is anywhere close to being level?

Why has the field sloped? Very simply, as the various stock exchanges compete for business, the officials running the exchanges have traded investor protection and interests for the volume and revenues provided by high frequency program trading.

Who should have been engaged with these exchanges to prevent these abusive trading programs? The SEC and FINRA. Who actually exposed the issues surrounding high frequency program trading? Financial blogs and Joe Saluzzi of Themis Trading. I commend Mr. Saluzzi given his position in the marketplace.

I am excited to apprise our readers and listeners that I will have Mr. Saluzzi as my guest this Sunday evening August 2nd from 8-9pm on my internet radio show, NoQuarter Radio’s Sense on Cents with Larry Doyle.

Perhaps our elected representatives in Washington along with financial regulators at the SEC and FINRA may care to listen and learn.

Related Commentary

Is Uncle Sam Manipulating the Markets?; July 1, 2009

Is Uncle Sam Manipulating the Markets? Part II; July 6, 2009

Is Uncle Sam Manipulating the Markets? Part III; July 8, 2009

Why High Frequency Program Trading Smells; July 14, 2009

High Frequency Trading: Point-Counterpoint; July 17, 2009

High Frequency Trading Debate: Mano a Mano; July 24, 2009

High Frequency Trading Debate: Mano a Mano

Posted by Larry Doyle on July 24th, 2009 5:42 PM |

In the spirit of continuing the dialogue on high frequency program trading, please view this ‘mano a mano’ debate on CNBC.

In one corner is Joe Saluzzi of Themis Trading. In the other is Irene Aldrige, Managing Partner of Able Alpha Trading.

Mr. Saluzzi initially exposed this activity to the public in late June. Irene views this trading activity as a natural evolution of modern technology.

Please let me know how you score “the fight.”

Wall Street Has a Problem as High Frequency Trading Moves to Main Street

Posted by Larry Doyle on July 24th, 2009 6:54 AM |

I am not here to rain on the parade, but I do think developments overnight have the potential to dramatically change the nature of our markets if not our economy. I am referring to issues surrounding high frequency program trading.

Until now, the debate over high frequency trading has largely been relegated to Wall Street periodicals, financial news outlets, and blogs, including Sense on Cents.

Well, this morning America awakens to see this high frequency debate course across the front page of The New York Times, Traders Profit With Computers Set at High Speed:

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.

It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.

Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense.

These systems are so fast they can outsmart or outrun other investors, humans and computers alike. And after growing in the shadows for years, they are generating lots of talk.

Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer.

This article is likely sweeping the globe at this very minute and, in my opinion, is particularly devastating in its tone and delivery . . . and justifiably so.

I can only imagine the commentary this evening at the local Rotary Club, Knights of Columbus, Lions Club, town carnivals, and church fairs. Probably something along these lines:

“Have you heard how Wall Street is screwing us?”

“I knew that game was never on the up and up.”

“What a bunch of thieves.”

Without entering into a debate over the merits or lack thereof of this high frequency program trading, I think Wall Street has a huge problem on its hands. Why? A question of fundamental fairness. With the publication and dissemination of this article, try to explain to the average Joe looking to buy 50 shares of IBM how he is being treated equitably.

As the New York Times reports:

“You want to encourage innovation, and you want to reward companies that have invested in technology and ideas that make the markets more efficient,” said Andrew M. Brooks, head of United States equity trading at T. Rowe Price, a mutual fund and investment company that often competes with and uses high-frequency techniques. “But we’re moving toward a two-tiered marketplace of the high-frequency arbitrage guys, and everyone else. People want to know they have a legitimate shot at getting a fair deal. Otherwise, the markets lose their integrity.” (LD’s highlight)

What do you think? Please share your thoughts and opinions.

Related Commentary

Is Uncle Sam Manipulating the Markets? July 1, 2009

Is Uncle Sam Manipulating the Markets? Part II July 6, 2009

Is Uncle Sam Manipulating the Markets? Part III July 8, 2009

Why High Frequency Program Trading Smells July 14, 2009

High Frequency Trading: Point-Counterpoint July 17, 2009

High Frequency Trading: Point-Counterpoint

Posted by Larry Doyle on July 17th, 2009 6:12 PM |

High frequency trading activity has become a very hot topic both on and off Wall Street. My trading instincts tell me that this activity is not productive for the long term health and well being of the market. I have referenced the work of Joe Saluzzi and his colleagues at Themis Trading in making the case for the prosecution.

In an attempt to present a case for the defense, I searched and found commentary written by Sang Lee, managing partner at Aite Group. Lee recently wrote for Advanced Trading, In Defense of the High Frequency Trading Community:

Various potential regulations, including the reinstatement of the uptick rule and transaction tax directly threaten the business model of the high frequency trading community.

Sense on Cents counterpoint: The uptick rule required short sellers of stock to only transact at a price higher than the previous trade. Our friendly Investing Primer, Investopedia, informs us:

This rule was introduced in the Securities Exchange Act of 1934 as Rule 10a-1 and was implemented in 1938. The uptick rule prevents short sellers from adding to the downward momentum when the price of an asset is already experiencing sharp declines.

The rule worked fabulously for almost 70 years before being discontinued in July 2007. It was discontinued in an attempt to promote trading volume on the exchanges and in turn increased fees.

Sang Lee writes further in making his point:

In recent years, growth of alternative electronic trading venues has been driven by a multitude of factors: the introduction of decimalization; the adoption of FIX as the main protocol for electronic communication; the availability of technology for developing market infrastructure conducive for electronic trading; the rapid adoption of electronic trading; the adoption of algorithmic trading; and the availability of co-location services.

Sense on Cents counterpoint: Fairly obvious with all of the technological advancements that we are not looking at your grandfather’s “buying 100 shares of IBM.” Modern day trading activity is both fast paced and high energy. Little wonder why it has become so much more driven by technical analysis than fundamental valuations. (more…)

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Posted in General, high frequency trading | 3 Comments »