July 22nd, 2014
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A STUNNER: GOLDMAN TO ABANDON HFT!?

This one is a stunner; there’s no other way to put it folks, and it is such a stunner that one simply cannot avoid some High Octane Speculation concerning it, and I suspect, that it may venture even beyond that, into Oxygen Deprived Speculation. Zero Hedge has reported on a story that Goldman Sachs may be abandoning the HFT(high frequency trading) which has served it so well in the past:

Triple Whammy Shocker: Goldman Shutting Down Sigma X

The heart of the matter, as far as Goldman is concerned, and as far as Zero Hedge is reporting, is that the high frequency trading that has now become the bread-and-butter of the American securities markets is in danger of a “Flash crash times ten”:

“And if Goldman is willing to exit not only HFT, not only legacy lit markets entirely, but also its dark pool, then something truly big and transformational is coming to not only the existing market structure, but something that will be so disruptive, that for once we can’t wait to find out just what Goldman has up its sleeves, sleeves which also happen to house the key lawmakers in the Beltway.

“Why is Goldman doing this now? We don’t know. It is worth noting however that on page 234 of Flash Boys, Michael Lewis cites Ron Morgan and Brian Levine, Goldman Partners and co-heads of Goldman’s global stock markets, who said that ‘Unless there are some changes, there’s going to be a massive crash, a flash crash times ten.‘”

For those unaware of the story, the Flash Crash being referred to is the 2010 “flash crash” when Proctor and Gamble stocks suddenly – and I mean very suddenly – started to plummet within a matter of seconds, then, just as suddenly, began to right itself, in a computer-driven high frequency trading crash. The ability to use computers to execute several buy and sell orders in a matter of microseconds, trading vast volumes of stocks, has now become the norm, and Goldman’s apparent exit from this practice is not only huge news, it is, as Zero Hedge avers, a “triple whammy,” or a “whopper doozie” as my friend George Ann Hughes would put it. As Zero Hedge indicates, it is a sign that Goldman knows something is coming (a flash crash times ten?) or something else.

The question is, what?

Here I indulge in some very high octane speculation, that what Goldman may know and suspect, perhaps even by a careful consideration of all aspects of the 2010 “Flash Crash”, is that the HFT networks – the “dark pools” that have now cropped up in and around the securities markets – are as secure as human invention and intelligence can make them, and that, in spite of built-in safeguards against such sudden losses of market value via high frequency trading, the system can still be “hacked”. Goldman is saying, in effect, that this particular casino is “not in compliance” and is walking away from the table. The dice are loaded; the wheel is fixed; the cards are shaved and marked.

Let’s add another consideration here: I’ve been maintaining all along – along with Catherine Austin Fitts and a few others – that the NSA electronic snooping is as much about financial spying as it is about terrorism. It is the ultimate insider trading mechanism, which raises the stakes of Goldman’s actions even higher, for it means that the banks and brokerage houses have some serious competition and indeed may have lost their control and influence in the casino; another faction in the form of the national security apparatus has muscled its way into the game, and no one’s electronic money is safe, not even the banksters’.

Perhaps – venturing way out to the end of the speculation twig here, and far beyond the ability of that twig to support the weight now put upon it – perhaps Goldman, in its investigations of that 2010 Flash Crash discovered something, some strange and curious fact or event hovering on the edge of the events of the day, that made it think that there may be not just one, but perhaps even two players on the block with the ability to enter supposedly secure systems, and alter the trading target algorithms remotely, and at will.  If they did, for the moment, they’re not talking.

See you on the flip side.

21 Responses to A STUNNER: GOLDMAN TO ABANDON HFT!?

  1. Aridzonan_13 says:

    Very interesting to see Goldman take it’s hand out of the cookie jar.. Couple that with bankers biting the dust on a rate to equal JFK / Grassy Knoll eyewitnesses and you have a serious primary trend..

  2. yankee phil says:

    The NSA has the ability(through millimeter radar frequency thought reflection capabilities)to read thought accurately. Do the math. They learned this technology from the nazi scientists who worked for nasa and the NSA’s own signal corps so the germans have it also1,do the algebra. Assume also the chinese and the russians must have it as well,plus the japs,do the trigonometry. So that leaves the rest of us poor working slobs doing the jerk.

    • DanaThomas says:

      He who reads can also alter. But on the other hand this could backfire if the victims are trained in visualization techniques, e.g. by projecting peaceful thoughts or perhaps Tibetan Mandalas…

    • terminally skeptical says:

      How much of this is conjecture? What is your best resource/reference for this assertion?

      Also, a couple of weeks ago you mentioned sequestered individuals at, I believe, IBM whose job it was to compile ledgers of fictitious failed trades at the behest of large trading houses (e.g. Goldman Sacks)to bogusly demonstrate where the pilfered money went. Has this charade received press coverage and become common knowledge where you live? (The Netherlands, no?)

  3. Milton Zentmyer says:

    Oh, the system is “systemically broken” well, slap my forhead, who knew????

    I’ve known that for years and so have millions of others whose money has been “harvested” by the market.

    Yes, they know something, wonder if it has to do with bankers falling out of windows and shooting themselves in the head multiple times with nail guns?

  4. Horizon says:

    ”no one’s electronic money is safe, not even the banksters’.

    Could this be related to this: The Canada Revenue Agency has reopened the services section of its website after security concerns linked to the “Heartbleed” bug prompted a four-day long closure.

    Read more: http://www.ctvnews.ca/canada/cra-reopens-website-after-shutdown-linked-to-heartbleed-bug-1.1774041#ixzz2yoQwJxIh

  5. Robert Barricklow says:

    What you do in this world is of no consequence; the question is, what you can make other people believe you have done?
    -A Study In Scarlet

    Every Exit Is An Entry Somewhere Else.

  6. DownunderET says:

    So the “squid” pulls the pin on HFT, or in other words they found out there is another “player” or “players” in the game and they have the upper hand. There can be no other reason for this monumental withdrawal from the game that made them billions. Goldman’ next move will be very interesting, with Wall St. losing the ability to fudge the figures. Zero Hedge sees this event as being a “sign” of something to come, and there is no doubt that the Fed is in this up to there ears, so the stock market will reflect this in the only way it can, up or down, it’s going to be interesting to watch, even for the “players”.

  7. henry says:

    “China should be followed closely; the pronouncements of its financial mandarins, not to mention the types of articles and books that appear in that country on monetary policy, should concern us all.”
    That was a very useful advice from gizadeathstar’s blog “China and Africa” for me as i basically applied that principle to this whole “Bitcoin” thing from last year. Especially considering the fact that Chinese financial institutions seemed rather “less enthusiastic” about the virtual currency.

    Then, after millions worth of bitcoin missing in trade platform in China last year, the state owned banks began promptly putting restrictions on the use of Bitcoins. Interestingly enough, India and Russia followed China’s suit as their financial institutions took similar action against the virtual currency.
    I noticed that equally “less enthusiastic” about it was Gizadeathstar and i was rather not surprised to learn the suspicion was “HFT fraud”, especially consider that the same year bitcoin was highlighted there was that “Snowden revelation”, which is financial in nature and pointing to an “ultimate insider trading mechanism”. Therefore i’m again not surprised to see “NSA electronic snooping” is mentioned in this article regarding Goldman abandoning HFT.

    Now comes this “stunner”, i think this development is somewhat echoed by a recent move by China’s Central bank, involving precisely “high frequency trading”.
    http://news.yahoo.com/china-central-bank-orders-halt-online-payments-using-034119459–sector.html

    The stated reason for this “sudden” move is precisely “security of verification procedures”.
    The thing about “QR code” is it is currently without electronic oversight of state issued “national payment system” known as “UnionPay”, since scanning QR code with mobile phones bypass those POS machines modified in accordance with UnionPay’s standard.

    This likely has something to do with a recent move by Russia “to diversify away from global monopolies like Visa and MasterCard”(as reported by RT’s news piece titled “Putin says Russia will launch national payment system, like China and Japan”),since the Chinese version of referred “national payment system” is precisely “UnionPay”.

    Another thing worth mentioning here is, as the biggest B2B group in China, Alibaba used to require all its customers to register with a Yahoo email account in order to access the company’s electronic payment tool known as “Alipay”, or the Chinese equivalent of Paypal. But for some reason the exclusive use of Yahoo service by Alibaba group was discontinued last year due to Yahoo suddenly ending its email service in China, as matter of fact “Yahoo.cn” is no more now.

    The quit of its operation in China by Yahoo is remindful of another U.S. based multinational Internet corporation which quited its operation in 2010, due to its “quarrel with the Chinese government(over internet freedom)”.
    Incidentally, both Google and Yahoo are reportedly involved in NSA snooping scandal as an aftermath of “Snowden revelation”.

    I’d say this also has something to do with another global development, namely BRIC nations plan to create their own “Independent Internet”.

    • henry says:

      Alibaba bonded itself with Yahoo in 2005, the next year Microsoft and Yahoo released a joint statement in which they urged the U.S. government to deal with the Chinese government.
      http://www.zdnet.com/blog/foremski/microsoft-and-yahoo-tell-us-government-to-deal-with-china-issue/36

      The move by these Internet corporations was followed by Hu jintao’s state visit to the U.S. in April. During the welcoming ceremony, a white house official mistakenly called China as “Republic of China”, and there was a disruption by a Falun Gong member who urged Bush to “stop Hu jintao from murdering people”. The situation of diplomatic awkwardness was further highlighted by some strange “body languages”.
      https://24.media.tumblr.com/0200b9f40e9559586c64fcdc970f0fe2/tumblr_n40we0fFgJ1sn1xs5o1_500.jpg
      The Chinese on the other hand, was sending a message of their own as Hu gave a copy of “Art of War” to Bush and his officials. What about the anti-satellite test in 2007, was that a message too?
      Also worth noting is that Hu also had a meeting with Microsoft’s Bill Gates at his private residence.
      http://www.computerworld.com/s/article/110661/China_s_President_Hu_has_dinner_with_Bill_Gates

      Microsoft tried to acquire Yahoo two years later.As part of the deal, Yahoo would sell its Asian assets including significant minority stakes in Yahoo Japan and China’s Alibaba Group.
      http://www.reuters.com/article/2008/05/19/us-yahoo-microsoft-idUSN1539081620080519

      It’s pretty clear that these technocrats tried their best at making inroad into China’s internet,hoping to have a significant share in electronic business. Involving the U.S. government and using “intellectual property rights” and “Human rights” as pretense/leverage. But the encroachment by these internet giants ultimately failed largely due to the Chinese government not giving in to Western rhetorics of “internet freedom”.

      Now these U.S. based multinational Internet corporations such as Google and Yahoo are out of business in China, the country has just launched its own internet search engine.
      http://zeenews.india.com/news/net-news/china-launches-new-search-engine_919543.html
      Adding to the fact that China has developed “its own very powerful and completely secure microprocessor totally lacking ANY NSA back door”, coupled with Huawei’s rapid overseas expansion causing accusations of cyber espionage by America and its allies. No wonder Google CEO Eric Schmidt calls the country an “Internet Menace”, but that was before “Snowden revelation”.

  8. marcos toledo says:

    Thanks you justawhoaman I just read your link to today zerohedge article. So here is the question what does Goldman Sachs know and when did it know it. Are GS intelligent rats leaving a sinking ship or are like Crowler from Justified using the feds to save their bacon so they can go back to business as usual after the round of the sacrificial monkeys by the government.

  9. justawhoaman says:

    http://www.zerohedge.com/news/2014-04-13/hft-purge-begins-sec-prepares-remove-some-high-frequency-trading-firms

    Actually, Goldman has decided to rewrite the rules (talk about get out of the way, little man!) so their “abandonment” was merely a sign that Goldman has “clean hands”. Oh, yeah, righto. As the article summarizes:

    “Why is all this happening? Because as everyone should know by now, what Goldman wants, Goldman gets. And Goldman wants a complete overhaul of a market that is systematically broken. Our only question is can this overhaul take place without an epic market rout as the HFTs suddenly all go into “Off” mode as their 25 year old math PhD operators look for greener pastures (and to get the hell out of Dodge before the subpoenas come flying in).”

  10. DanaThomas says:

    Faites vos jeux, monsieurs…