Summary of Written Testimony for Computerized Trading

I wanted to collect my thoughts on the Senate Testimony today at 10AM. Apparently there will be a live webcast via this link:

As for my background, I have been an active trader since 1987, and manage over 5B in AUM. We are not market-makers and do not participate in high frequency trading of any type. However, we use computerized execution algorithms to adjust our portfolios each day in equities and futures markets around the world. Our average holding period is 7 days, and our minimum holding period is one day.

In order from most anti-HFT to most pro-HFT:

David Lauer

Mr. Lauer continues in the grand tradition begun by others that HFT constitutes a clear and present danger to our financial system. In my opinion he asserts inaccurate claims concerning the May 6, 2010 Flash Crash. Please see my blog post

Interestingly, Larry Tabb (another Senate witness) addresses this type of hyperbole by listing 12 other non-HFT  factors that might be contributing to declining investor confidence in the markets.

On the positive side, Mr. Lauer’s written testimony offers poignant arguments against burgeoning message flow, exotic order types, dark pool opacity, and absurdly short order lifetimes. In addition, the points about complexity’s role in creating unfair opportunities ring true across a far wider stage than just market micro-structure. I especially appreciated Mr. Lauer’s quite novel idea of open-sourcing the data and setting up a contest-like environment to “…find innovative ways of designing surveillance systems and algorithms.”


Andrew M. Brooks

Mr. Brooks echoes much of Mr. Lauer’s testimony, although in far more succinct form, and without the sweeping conclusions about HFT’s negative impact on the financial world. He suggests that pilot programs be used to test out various solutions to the major HFT issues.


Larry Tabb

Mr. Tabb’s testimony is much more descriptive of market structure and definitely is the most detailed and specific about the issues. I believe that his testimony is fairly even-handed and sober. He does state that our markets are overly complex, and goes into some details as to why that is a major problem. He writes at length about the issue of less liquid stocks and how the current market structure is tilted towards trading optimality for the stocks of the largest companies.

Two very interesting assertions are that “The current market structure benefits small investors” and “Day traders are completely disadvantaged.” As mentioned above, he goes into many reasons for dropping investor confidence that fall outside the scope of market structure. Instead of recommending that complex order types be banned, he recommends more transparency in the exchanges’ order descriptions.  There are a lot more specific recommendations in his testimony.

Chris Concannon

Mr. Concannon works for Virtu, an electronic market maker. He cites complexity as an issue; so, unanimously, the witness panel agrees that our markets suffer from too much complexity. However, he blames what he calls “major regulatory reengineering events.” I am especially annoyed that he doesn’t mention the proliferation of order types that has played a huge part in un-leveling the playing field with unnecessary complexity. He calls for “… the need for additional obligated liquidity in our market.” Interestingly, most of the issues cited by the other panelists are not mentioned by Mr. Concannon.

14 thoughts on “Summary of Written Testimony for Computerized Trading

  1. Hello, i feel that i discovered anyone seen my website thus i got here to come back the drive? . My business is wanting to to uncover challenges to reinforce this site! I reckon that it is alright to use of one’s tips!

  2. What i don’t understood is if truth be told how you’re not really a lot more smartly-liked than you may be right now. You are so intelligent. You recognize therefore considerably with regards to this matter, produced me individually believe it from so many numerous angles. Its like men and women aren’t interested until it is something to do with Woman gaga! Your own stuffs outstanding. Always take care of it up!

  3. I’m amazed, I must say. Rarely do I come across a blog that’s
    both equally educative and engaging, and without a doubt,
    you’ve hit the nail on the head. The problem is something
    which too few people are speaking intelligently about. I am very happy I came across this during my search for
    something relating to this.

  4. This is really attention-grabbing, You are an overly skilled blogger.

    I’ve joined your rss feed and look ahead to
    in quest of extra of your wonderful post. Also, I’ve shared your web site
    in my social networks

  5. Put cold water in the container and let it pass through a flexible tube
    to a heating chamber. Espresso coffee machine uses steam
    pressure to force hot water through finely ground coffee beans.
    Making the perfect cup of coffee is about more than buying
    a jar of instant and adding a bit of water.

  6. Informamos que no atendemos averías de aparatos en periodo de garantía, no somos servicio técnico oficial Siemens en Menorca, sino que ofrecemos nuestros servicios para su reparación. Nuestro servicio técnico le brinda la mejor asistencia con lo que usted mantendrá la confianza de haber sido atendido por profesionales de la empresa Lacofriser S.L que corresponde al Servicio Técnico Oficial en Guadalajara. Nuestro servicio técnico oficial compuesto por un gran equipo humano formados y capacitados para dar el mejor servicio a nuestros clientes. Reparaciones de electrodomésticos Siemens en Marbella por técnicos certificados. Reparar su lavavajilla Siemens en Marbella es fácil siempre que su reparación sea realizada por técnicos certificados.

  7. The best realtors are not those who have their ads all
    around the different types of media but the real greatest home agent
    is the one that pay attention to their customers as well as works with
    them as a team along with co-operation, ethics, as well
    as ways and it is constant to offer the desired outcomes.
    By being able to pan and zoom on the property walkthrough, buyers are
    more likely to spend more time exploring the listing.
    This info may help you to decide on making an offer on a property and the
    price you need to offer.

  8. May I simply say what a comfort to discover somebody who genuinely knows what they are talking
    about on the internet. You certainly realize how
    to bring an issue to light and make it important. More people really need to read
    this and understand this side of the story. I can’t believe you’re not
    more popular since you definitely possess the gift.

  9. Vi jugar a Pirri, Breitner, Camacho en sus inicios, a Netzer, todavía tengo recuerdos de un Madrid Velencia en el que jugaba Kempes y en el que el Madrid le dio la vuelta a una liga igualadísima muy parecida a la que ha ganado este año, me hicieron Socio y a partir de ese momento no faltaba un Domingo a para ver al Madrid. Las comodidades incluyen frigorífico y sofá cama, además de un servicio de limpieza disponible todos los días.

  10. Nuestro servicio técnico Philips Barrio del Pilar Madrid lo componen técnicos especializados en esta marca y realizan todas las reparaciones usando siempre piezas originales Philips. Esto es a través de comprobaciones periódicas se busca si alguno de los botones dispuestos en filas y columnas. En el exterior circula el aire de condensación, se trata de un aire tomado del exterior, que se calienta a su paso por el condensador, y vuelve a ser expulsado a una temperatura superior.

Leave a Reply to Cancel reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>