Successful BCBS239 monitoring is simple – but not off-the-shelf

From Bobsguide –

“Achieving compliance with the requirements of BCBS239 is proving to be a real headache for many banks.

As a set of principles laid down by the Basel Committee on Banking Supervision, they are hard to quarrel with. Yet because they are principles, rather than detailed requirements, knowing what to measure and report on and how to present it is far from straightforward.

Although, at its heart, BCBS239 asks for risk reports to be timely, complete and accurate, many banks struggle to understand how they should measure themselves against these headings.”

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British trader arrested and charged with helping cause 2010 'Flash Crash'

A United Kingdom trader has been arrested and will remain in custody, pending extradition to the U.S. to face criminal and civil charges that include wire fraud, commodities fraud, attempted manipulation and spoofing.

From USA Today –

“Alleged market manipulation by a London-based high-frequency trader helped cause the 2010 "Flash Crash" that roiled financial exchanges and severely tested investors' confidence, U.S. authorities said Tuesday.

Navinder Singh Sarao, 37, and his company, Nav Sarao Futures Limited PLC, used computer software to manipulate Standard & Poor's futures contracts through a practice known as "spoofing," according to the Commodity Futures Trading Commission and the Department of Justice.”

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Exchanges Can Ruin High-Frequency Trading Benefits: Study

From Bloomberg

“Exchanges risk making it harder for investors to get the best price by facilitating ever-faster trading, according to academics who examined Nasdaq OMX Group Inc. venues.

When Nasdaq sped up its markets in Copenhagen, Helsinki and Stockholm in 2010 by introducing its INET software platform, it spurred a race for profits among high-frequency traders, according to the report from VU University Amsterdam’s Albert Menkveld and his student, Marius Zoican. That competition reduced earnings. To compensate, the traders widened the spread between prices they were willing to pay to buy and sell shares, making it more expensive for most investors to trade stocks.

High-frequency traders using computers to automatically buy and sell have become the dominant market makers on exchanges around the world, supplanting human traders. Menkveld and Zoican’s paper says that when exchanges get faster, such as when Nasdaq reduced the reaction time of its Nordic markets to 250 microseconds from 2,500 microseconds in early 2010, they encourage not just helpful, liquidity providing high-speed traders, but also speculative ‘bandits’.”

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Money Examiners Finds High Frequency Trading Should Be Outlawed

From PRWeb

“High Frequency Trading on Wall Street should be outlawed, a new MoneyExaminers.com poll has found. The practice allows professional traders to have a big advantage trading stocks over smaller investors.

A huge majority of respondents say high frequency trading on Wall Street should be outlawed, according to a new poll just released by http://www.MoneyExaminers.com, the innovative financial news website that follows the money for consumers and analyzes financial markets and issues.

In fact, 70% of those surveyed said they feel high frequency trading should be outlawed. Algorithms written by computer scientists clearly provide major investment firms advantages trading stocks on Wall Street over and above average stock buyers. News reports and information that reach the traders equipped with high frequency trading are able to make trades faster and make more money on stocks.

High frequency trading accounts for more than 80% of all trades on a daily basis alone on the New York Stock Exchange, where fast trading has previously caused regulators to halt trading on some stocks as a result. ‘

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FX Traders Facing Extinction as Computers Replace Humans

From Bloomberg

“A widening probe of the foreign-exchange market is roiling an industry already under pressure to reduce costs as computer platforms displace human traders.

Electronic dealing, which accounted for 66 percent of all currency transactions in 2013 and 20 percent in 2001, will increase to 76 percent within five years, according to Aite Group LLC, a Boston-based consulting firm that reviewed Bank for International Settlements data. About 81 percent of spot trading -- the buying and selling of currency for immediate delivery -- will be electronic by 2018, Aite said.

“Foreign-exchange traders are much like stock floor traders: a rapidly dying breed,” said Charles Geisst, author of “Wall Street: A History” and a finance professor at Manhattan College in Riverdale, New York. “Once the banks realize they are costing them money, the positions will dwindle quickly.”

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