Challenges Facing 'Flash Boys' IEX CEO Brad Katsuyama (video)

Challenges Facing 'Flash Boys' IEX CEO Brad Katsuyama

FT.com's Richard Henderson interview of the founder of the rival IEX exchange on why it has failed to capture much more than 3 per cent of the US equity trading market. Michael Lewis’s book 'Flash Boys' depicted Mr Katsuyama as a crusader against a market that had become 'rigged' to benefit high-speed traders. Financial Times (ft.com) video above published Jun 10, 2019.

IEX Stock Exchange is a stock exchange based in the United States. It was founded in 2012 and launched as a national securities exchange in September 2016. On October 24, 2017, IEX received regulatory approval from the SEC to list companies. IEX listed its first public company, Interactive Brokers, on October 5, 2018.

• Domain: iextrading.com
• Founded: 2012
• Owner: IEX Group, Inc.
• Key people: Brad Katsuyama (CEO); Ronan Ryan (President)

Tweets by IEX

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Tech Review 1) Big Tech's Privacy Problem, 2) Amazon Air Expands (video)

Tech Review (TR 2019-02-23)--Domain Mondo's weekly review of tech investing news: Features • 1) Big Tech's Data Privacy Problem, 2) Amazon Air Expands, Look Out FedEx and UPS!, 3) Investing: The Week & Investor Notes: a. Amazon.com, Inc. $AMZN, b. EU, ECB & Italy,  4) ICYMI Tech News: Google's Waymo, Amazon, Samsung, IBM, eBay, Uber, Walmart, HFT Speed Bump, Zillow, Brick-and-Mortar Meltdown, Password Managers Vulnerabilities. 

1) Big Tech's Data Privacy Problem

Sean Parker, former President of Facebook and current Chairman of The Parker Foundation (parker.org), discusses big tech's data privacy problem--"Amazon not guaranteeing you any privacy"--CNBC International TV video published Feb 13, 2019.

See also: The U.S. government's Federal Trade Commission (FTC) and Facebook are negotiating a record, multibillion-dollar fine for the company’s privacy lapses--WashingtonPost.com.

2) Amazon Air Expands, Look Out FedEx and UPS!

Amazon $AMZN aims to compete with FedEx $FDX and UPS $UPS in the logistics and shipping industry. That's what analysts told CNBC.com after Amazon Air recently expanded to 50 planes and announced it will open a $1.5 billion air hub in Northern Kentucky in 2021. Amazon is handling up to 26% of its own shipping, meaning FedEx, UPS and the U.S. Postal Service are losing a portion of Amazon's business. FedEx says it's not worried, but Morgan Stanley reports the major shippers have already lost 2% revenue to Amazon Air. CNBC.com video above published Feb 16, 2019.

3) Investing

The Week: NASDAQ Composite +0.7% | S&P 500 Index +0.6% | DJIA +0.6%

 "a dramatic turnaround that has given investors renewed faith in the nearly 10-year bull market"--WSJ.com February 22, 2019.

Wall Street's Charging Bull

Investor Notes: 
a. Amazon.com, Inc. $AMZN

Origin Story: How @amazon started with 20 mail order products and then dominated e-commerce: https://t.co/uotd9K1Tvh pic.twitter.com/qwCUahMwGl

— Yahoo Finance (@YahooFinance) February 16, 2019

On Amazon's Nixing New York for HQ2: "I’m confused. I really can’t understand why anyone would want to build a corporate HQ in Queens? Have you been there?"--Bill Blain

b. EU, ECB, & Italy:

After a brief recovery, #Italy has succumbed to its third #recession in a decade. Its government is unlikely to revive flagging investor confidence or undertake economic reforms that might jumpstart the moribund #economy.
Read more: https://t.co/FufTDY45eB pic.twitter.com/EbezhtpOOM

— OMFIF (@OMFIF) February 14, 2019

Italy headed for 'vicious' debt crisis--government actions eroding investor trust--omfif.org.

"... the news changes our perceptions. The trick is to separate the chaos of new flow from the tau of markets. Markets are linear functions of buy/sell – they are not necessarily about common sense. To illustrate: last week I wrote about Italy, pointing out just how hopelessly its ensnared and entrapped within the strait-jacket of the Euro, with little prospect of growth, employment or upside. Yet Italian bonds are one of the top performing assets – AND WILL REMAIN SO – because the ECB can’t afford to let Italy go, and Europe sliding back into downturn pretty much ensures they’ll continue to bailout Italy and likely resurrect QE in some form ..."--MorningPorridge.com

ECB considers restarting stimulus mechanism--marketwatch.com.

4) ICYMI Tech News:

Google’s Waymo risks repeating Silicon Valley’s most famous blunder--how to build a minimum viable product for driverless cars--arstechnica.com; and Google to unveil Project Stream, its "Netflix-Like Game Streaming Service" at a Game Developers Conference keynote on March 19--fortune.com.

Amazon has secured central London retail space for its checkout-free Amazon Go food stores, in what would be the first expansion of Amazon's automated convenience shops outside the United States--thegrocer.co.uk.

Samsung trying to reinvent itself as a top-tier supplier for 5G wireless networks and bridge a big gap with market leader Huawei, Ericsson and Nokia.

Cisco $CSCO--'Nothing But Network' Is Taking Cisco To A Very Good Place--seekingalpha.com.

IBM Watson Anywhere initiative makes Watson AI services available across AWS, Azure and GCP, in addition to their own IBM Cloud offerings.

eBay $EBAY: hedge funds and institutional investors place bets on the e-commerce platform.

Uber (uber.com) sues New York City over the law that caps the number of ride-hail cars and pausing the issuance of licenses to drivers for 12 months--theverge.com.

Why Walmart farms out same-day grocery deliveries to low-cost freelance drivers--reuters.com.

"Flash Boys" HFT Speed Bump (a 3-millisecond trading delay), to be implemented in the ICE Futures U.S., Inc. (IFUS) (pdf), gold daily and silver daily futures markets. Comments must be submitted on or before March 15, 2019.--CFTC.gov.

Zillow (zillow.com), a new breed of high-tech real estate flippers “iBuyers” using algorithms (and a healthy dose of Silicon Valley venture capital) to buy at massive scale--bloomberg.com.

Brick-and-Mortar Meltdown--“I prefer not to scare you at this point, okay. But it’s something that we’ve been able to withstand”--Simon Property Group CEO David Simon. See also "No Light At The End Of The Tunnel."

Personal Tech: Severe vulnerabilities uncovered in popular password managers--zdnet.com.

-- John Poole, Editor, Domain Mondo  

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Dark Pools & High-Frequency Trading: Keith Ross, PDQ CEO Interview

Masters in Business interview of Keith Ross, Chief Executive Officer of PDQ Enterprises -- pdqats.com-- dark pool operator, and former CEO of high-frequency algorithmic trading company Getco.

Interviewer is Barry Ritholtz (ritholtz.com) who wrote:

In our conversation, we discuss what High Frequency and Algorithmic trading are, the changes in Market Structure over the past 30 years, and what the proper role of the Exchanges should be. It gets a bit wonky once the conversation whether HFTs are superior to Specialists, the plusses and minuses of Fragmentation. We also head a little deeper into the weeds on issues of Co-location, Packet-sniffing, Spoofing, Quote-stuffing and Walking away. I would be remiss if I didn’t bring up front running as well.

PDQ Enterprises is based outside Chicago in Glenview, Illinois, with offices in New York City and Westport, Connecticut. PDQ Enterprises pioneers new and efficient ways to participate in today’s complex electronic markets. A dark pool and ATS (Alternative Trading System) firm specializing in unique inverse auctions for institutional trading. Previously, Ross ran Getco, one of the largest HFT forms (Getco was sold to Knight Trading last year for $1.4B). See also: Alternative Trading System (ATS) Definition | Investopedia.

Tweets by @PDQ_ATS

About PDQ:

    (Video published Dec 17, 2014)

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Market Impact of High Frequency Trading, Nasdaq's Edward Knight (video)

The Market Impact of 'Flash Boys' - Edward Knight, Nasdaq's executive vice president and general counsel, discusses high-frequency trading with Bloomberg's Cory Johnson and Carol Massar on "Bloomberg Advantage Primetime." Published on Oct 1, 2015

Nasdaq (Nasdaq: NDAQ) is a leading provider of trading, clearing, exchange technology, listing, information and public company services across six continents. Through its diverse portfolio of solutions, Nasdaq enables customers to plan, optimize and execute their business vision with confidence, using proven technologies that provide transparency and insight for navigating today's global capital markets. As the creator of the world's first electronic stock market, its technology powers more than 70 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to more than 3,500 listed companies with a market value of over $9.1 trillion and more than 10,000 corporate clients. To learn more, visit http://nasdaq.com/ambition or http://business.nasdaq.com.(source: nasdaq.com)

Nasdaq SMARTS Surveillance technology powers surveillance and compliance for 40 marketplaces, 11 regulators and 100 market participants across 65 markets globally. Scalable to millions of transactions and flexible to manage a number of unique data sources, SMARTS Surveillance holistically examines scenarios across multiple venues and asset classes. (source: nasdaq.com)

Nasdaq, Inc. is an American multinational financial services corporation that owns and operates the NASDAQ stock market and eight European stock exchanges, namely Armenian Stock Exchange, Copenhagen Stock Exchange, Helsinki Stock Exchange, Iceland Stock Exchange, Riga Stock Exchange, Stockholm Stock Exchange, Tallinn Stock Exchange, and NASDAQ OMX Vilnius. It is headquartered in New York City. (Wikipedia)

Investor Relations: ir.nasdaq.com

Principal domain name: nasdaq.com

See also on Domain Mondo: Ex Machina Wall Street, Bots Have Taken Over the Markets Sept 1, 2015

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Ex Machina Wall Street, Bots Have Taken Over the Markets

A world prone to "computer stampedes"--

If you're first out the door, that's not called panicking. - Margin Call (2011)

Rise of the bots - Fortune: "In short, algorithms are taking over our lives. An algorithm is simply a piece of software code that operates like a decision tree, considering multiple variables and then spitting out a decision or recommendation. (A bot is typically a collection of algorithms.) Without taking a step back, as Christopher Steiner does in Automate This: How Algorithms Came to Rule Our World, it’s hard to appreciate how fast and far algorithms have come in recent years, and what the consequences are for modern culture. Steiner, a former Forbes writer, set out three years ago to explain how trading algorithms (which, in their simplest form, make buy/sell decisions based on various data inputs) had overtaken Wall Street. By that time, wildly complex trading bots had transformed financial markets..."

High-speed trading, also known as High-frequency trading (HFT) in action:

Citadel Group, a high-frequency trading firm located in Chicago, trades more stocks each day than the New York Stock Exchange. (CNN, July 2013). Domain name: citadel.com

"While it may take weeks before regulators understand why the plunges occurred, one reason for the swing is that automated computer programs have changed how markets function… Orders are being executed at lightning speeds in huge volumes. But there is another, often overlooked implication: these machines are being programmed to link numerous market segments together into trading strategies. So when computer programs cannot buy or sell assets in one segment of the market, they will rush into another, hunting for liquidity. Since their algorithms are often similar (or created by computer scientists with the same training) this pattern tends to create a “herding” effect. If a circuit breaks in one market segment, it can ripple across the system faster than the human mind can process. This is a world prone to computer stampedes." - FT.com, Aug 27, 2015 (emphasis added)

"... if you think it was human beings executing sales of Starbucks (SBUX) down 22% on Monday’s open [24 Aug 2015], you’re dreaming. And if you believe that it was thinking, sentient people blowing out of Vanguard’s Dividend Appreciation ETF (VIG) at a one-day loss of 26% at 9:30 am..." - Josh Brown

Just remember:

"... despite its obvious attributes “Black Box” trading [is] very tricky. The algorithms may work for a while [even a very long while] and then, inexplicably, they’ll just completely “BLOW-UP”... The real challenge ... [is] to “sniff out” the degrading model prior to its inevitable “BLOW-UP” .... “because, you know, eventually they ALL blow-up“… as most did in August 2007..." - Black Box Trading: Why They All “Blow-Up” | GlobalSlant

XKCD

Caveat Emptor!

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Brad Katsuyama, IEX Trading, Disrupting Stock Markets, HFT (videos)

Wall Street Week | Episode 13 | Brad Katsuyama, Steven Einhorn - This July 19th episode of Wall Street Week features Brad Katsuyama, co-founder and CEO of IEX Trading and subject of Michael Lewis' best-selling book "Flash Boys," and Steven Einhorn, Vice Chairman of Omega Advisors. Topics include high-frequency trading (HFT), market structure, and economic and investment outlook. Einhorn believes this bull market has at least 2 more years to run. According to Einhorn, historically, equity (stock) markets continue to increase for 30 months following the first interest rate increase by the Fed (some believe the Fed will begin increasing rates later this year) and Einhorn says this economic expansion could continue for several more years based on factors he follows. See also the IEX video below.

Domain names of companies referenced:

• iextrading.com
• omega-advisors.com
• wallstreetweek.com

Topics: HFT, high-frequency trading, algorithmic trading, markets, spoofing, economy, investing, cycles of rules(regs)-loopholes-scandals, transparency of information, complexity favors insiders, arbitrage, dark pools, the public interest


IEX Intro

See also: Flash Boys: Changing Wall Street from Ellevate on Vimeo -  fireside chat with with Sallie Krawcheck and Brad Katsuyama features discussions about IEX, electronic trading, changing Wall Street, and making a difference while still making money.


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Investing, Trading Against Machines, Jim Chanos Shorts China (video)

Kudos to Anthony Scaramucci and SkyBridge Media LLC, an affiliate of SkyBridge Capital, for acquiring rights to use the domain name wallstreetweek.com and reinventing the iconic program originally hosted by Louis Rukeyser. The program airs on Fox stations in New York, Washington, D.C., Chicago and San Francisco, and streams online at the website and on youtube.com. The legendary James Chanos of Kynikos (Greek for "cynic") Associates LP, and trader Lawrence Altman were featured on the latest episode--and they had a lot to say which may be relevant to all kinds of investors, covering many diverse topics, including China, the art market, energy stocks, the 2010 flash crash and trading against machines (HFT)--enjoy!


Wall Street Week published May 24, 2015: Short seller Jim Chanos of Kynikos Associates and trader Lawrence Altman of CBD interviewed by hosts Anthony Scaramucci and Gary Kaminsky. (Program length 28:30)

Another 3 or 4 years, China will look like Greece?

Of China's increasing debt and its threat, Jim Chanos said, "Chinese banking system is bloated and it’s basically taking out more and more leverage. That same ratio is now 300 percent. So, in five years they have more than doubled their debt-to-GDP and I joke to my Chinese friends, but somewhat half seriously, another three or four years they are going to be like my homeland Greece. They are going to be at 400 percent.”

“So, here is, here is the problem and the problem is the credit story,” Chanos said. “And the Shanghai stock market, by the way is a very bad barometer. We are not short Shanghai. We have never been short or long the the Asia market. When I started looking at China, it was 3,500, it went to 1,900 and now it’s 4,300 and when it was at 1,900 nobody told me, 'oh this means this is the end of China.' It was just the Shanghai stock market, its retail market. Now that it’s at 4,300. Everybody is coming out of the woodwork to say China is turning, it’s not.”

Domain Mondo comment and analysis: As Chanos noted in the program, short sellers are cynics and keep the system honest. Based on his assessment of China and the art market, Domain Mondo expects domain name values--particularly .COM domain names-- to continue rising consistent with overall market trends (note his comments about the Shanghai market) and wealthy Chinese buyers' preference for dot COM domains--the global online standard. See The Bull Market in dot COM Domain Names.[Note disclaimer at foot of webpage and here.]

wallstreetweek.com

skybridgecapital.com

kynikos.com

sothebys.com


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Ritholtz Interview: Brad Katsuyama, IEX, High Frequency Trading (audio)

Masters in Business: Brad Katsuyama - This “Masters in Business” podcast features Brad Katsuyama of IEX, probably best known for his role as the lead character in Michael Lewis’s book, “Flash Boys: A Wall Street Revolt.”

Interviewed by Barry Ritholtz for Bloomberg View, Katsuyama describes how it became clear that something had changed in the market structure, but no one really knew what it was. He explains how he and his team eventually unraveled how algorithm-driven high frequency trading worked. Also covered are his appearance on “60 Minutes,” and his debate on CNBC with William O’Brien, former chief executive officer of the BATS Global Markets stock exchange.

IEX Group, Inc. domain name: iextrading.com

other links:
bloomberg.com
bloombergview.com
ritholtzwealth.com
ritholtz.com

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