Tuesday, October 10, 2017

Exchanges Seeking Immunity with Bill HR3555



Representative Loudermilk (R-GA) just introduced a new bill which would amend the Securities and Exchange Act of 1934 to eliminate or reduce regulation overreach into business practices of exchanges that do not involve either effecting or reporting a transaction on the exchange.  As Representative Loudermilk put it in the following statement when introducing the bill, “Regulatory agencies have a tendency to expand their reach into areas they should not be regulating and engage in mission creep, which can stifle innovation”.
If the innovation referred to is the exchanges seizing the opportunity to create new revenue flows by selling speed, rather than effecting and recording transactions, then perhaps we need regulation overreach.
The current unprecedented structure of exchanges and dark pools is drastically different than a decade ago.  It seems that HR3555 would put safeguards in place to prevent agency over-regulation, or in other words would allow regulators to turn a blind eye to the new market structure by not addressing these issues.  This is an issue that Day Traders everywhere have been dealing with for at least the last decade.
HR3555, titled The Exchange Regulatory Improvement Act, aims to further define the term “facility” regarding regulatory purposes of an exchange, adding that the term does not refer to business activities with a purpose that is not intended to either report or effect a transaction on the exchange.   
What this means in simple terms is that this bill attempts to provide an exempt status, or altogether immunity, for an exchange’s business activities outside the core functions of effecting and reporting trades.  
Exchange Activities Receiving Immunity
We need to understand the activities in question To understand the effect that passing HR3555 would have.  Exchanges today make money in ways other than facilitating trades. The most recognized activities include colocation of servers, enhanced proprietary data feeds, and complex order types all designed to give an unfair advantage to high frequency traders (HFT).  HFT firms currently make up at least 50% of all trading activity in US Markets.   For more information on how stock exchanges earn revenue with business activities other than recording or effecting trades, check out this post on How Rising Costs of Stock Exchange Data Fees Affect Online Equity Trading.
Great Point Capital has been serving the trading community since 2001, with 100+ prop traders actively trading the firm’s capital.  Headquartered in Chicago with offices in Austin, TX, we specialize in equities and equity options.  Contact us today to learn how we can successfully trade together with high performance results.  We are one of the few firms able to offer access to Takion Software Platform, enhancing your online equity trading experience.

Tuesday, October 3, 2017

Does Bill HR3555 Present a Potential Conflict?


A new bill was just introduced by Representative Loudermilk (R-GA), which would amend the Securities and Exchange Act of 1934 to reduce or eliminate regulation overreach into business models of exchanges that do not involve either reporting or effecting a transaction on the exchange.  This may have been prompted by the flurry of lawsuits following the publication of Michael Lewis’ Flash Boys.  One such lawsuit was thrown out when the judge claimed the exchanges had immunity under quasi-government powers.  
Since the filing of the combined lawsuits, the Securities and Exchange Committee (SEC) commented by saying that they had no authority to adjudicate the lawsuit, and that “immunity only applied when stock exchanges acted as a regulator, and not as an operator of a market”.  This means that the SEC is stating that exchanges are NOT entitled to absolute immunity arising from commercial activities such as enriched data feeds or selling collocation.
This could be weighing on the minds of the executives of the exchanges, prompting the proposal of HR3555.   The bill must pass the House and Senate before becoming law and will most likely be reviewed by committee before it’s sent to the House.  
If passed, Loudermilk’s bill appears to give protection from investor lawsuits stemming from unfair advantages granted to HFT firms.  The implied intent is to skirt the SEC’s role of protecting investors by finding a way around them in Congress.  Just by adding one paragraph to the original Securities Exchange Act of 1934, the SEC could be prevented from acting as a regulator of stock exchanges for any issue surrounding the selling of speed.  
Potential Conflict?
If HR3555 removes the non-execution portions of their business from regulation, wouldn’t that also remove those from their immunity? That would take it out from under SEC regulation, but it seems that it would also take it out from under the immunity umbrella afforded to “quasi-government” stock exchange activities.
If they carve out those activities from those regulated under the SEC Act of 1934, how could they then claim immunity for the removed activities? They would have it both ways – not included under the Exchange umbrella for regulatory purposes, but included when courts look at immunity granted to Exchanges.
We will be watching the progress on HR3555 as it moves through the legislative process.

Great Point Capital has been serving the trading community since 2001, with 100+ prop traders actively trading the firm’s capital.  Headquartered in Chicago with offices in Austin, TX, we specialize in equities and equity options.  Contact us today to learn how we can successfully trade together with high performance results.  We are one of the few firms able to offer access to Takion Software Platform, enhancing your online equity trading experience.

Tuesday, September 19, 2017

How Long Will the Calmness on Wall Street Last?


With the level of uncertainty in the air it is a wonder we are experiencing such near record low volatility on Wall Street.  Is complacency to blame for the calmness on Wall Street?  Have we become so used to unsettling news and political turmoil that it’s now the new normal?  How do we explain the high performance we’re seeing with the unprecedented news we see regularly?  We can’t turn on the news without hearing about Russia, North Korea, Climate Control, Healthcare and many other globally important issues.  
This type of news typically affects the market in some way, although investors reactions to current events are also unprecedented.   Have we become so desensitized to political turmoil that we are complacently enjoying the high returns we’re seeing today?  If that is the case, there are some concerns that investors will be ill-prepared for an inevitable shock to the market.  

Historically, low volatility is good for markets, but sooner or later something’s got to give.  Usually, when the VIX is high, the S&P 500 is low, which could be a good time to buy.  When the VIX increases, the S&P 500 typically decreases.  If the VIX increases too quickly, however, investors show concern that the market will continue to decline and people begin to react irrationally.  This fear factor makes it difficult to trade during market volatility.  
Trade with Confidence During Low or High Volatility

Great Point Capital is a selected team of professional, experienced traders. An experienced trader will know how to react, or not react at all to events that could rattle a new up and coming trader.  Hone your strategies and work with an experienced team on our unique intra communication software platform.  Experience the sophistication of Takion  trading platform for superior performance catered to your trading style.  .  

Having a stable trading platform is always important, but having the right software to handle increasing quote traffic when volatility returns will determine whether you can take advantage of the trading environment or get swallowed by it.  Experience the sophisticated trading platform of Takion for superior performance based on your unique trading style.  Great Point Capital is a member of FINRA.  

Great Point Capital has been serving the trading community since 2001.  Our 100+ prop traders actively trade the firm’s capital, specializing in equities and equity options.  We are one of the very few firms able to offer access to Takion Software Platform, enhancing your trading performance.  To earn to your maximum potential in times of low or high volatility, contact us today to speak with one of our knowledgeable staff.  


Tuesday, September 12, 2017

Wall Street Fear Gauge Near Record Lows


Historically, when the market is in a positive upswing, volatility will decrease, and conversely when volatility increases market performance usually decreases as investors experience greater risk.  The volatility, or fear gauge, has a direct impact on wall street returns and performance.
With the current fear gauge near record lows, we continue to wonder how long the market will remain this calm.

HFT on the Rise

High Frequency Trading (HFT) has increased to the volume of approximately half of all wall street trades.  With this rise in HFT and fewer market participants, when the market swings the other way we could see the impact with a large correction.  

With the level of HFT at record high levels it seems that HFT activity along with fewer participants will contribute to future wall street performance, and possibly direct rather than react to the volatility.  

Passive Investing
Passive Investing occurs when investors place their money in ETFs or index mutual funds instead of actively managed funds, and has been increasing over the last decade.  A recent report from Moody’s Investors Service states that over 28% of assets under management are in passive investments at the current time, and expects that by 2024 that number will increase to over 50%.

Passive Investing can soften volatility as new funds are continuously deployed into the same stocks, rather than moved between sectors, or out of stocks entirely into bonds or cash or commodities.

The new Fiduciary rules, in place since June 9, will make passive investments even more attractive, given the risk of higher fees and underperformance by actively managed funds.

More Frequent Option Expiration

Options on U.S. Stocks used to expire once a month or once per quarter, but now SPX, the index that tracks the S&P 500 stocks, has options that expire three times per week with some days having morning and afternoon expirations on the same day.  These all give investors new methods to offload risk in any time frame, lessening the need to buy and sell in the open market to adjust their positions.  Moreover, investors fine-tune their bets to the point that they don’t need to overreact to market moves, which can create volatility.

Great Point Capital has been serving the trading community since 2001.  Our 100+ prop traders actively trade the firm’s capital, specializing in equities and equity options.  We are one of the very few firms able to offer access to Takion Software Platform, enhancing your trading performance.  To earn to your maximum potential in times of low or high volatility, contact us today to speak with one of our experienced traders.   

Tuesday, September 5, 2017

How Long Will the Market Maintain This Low Volatility?



The volatility of the stock market directly impacts stock returns and overall performance.  History shows us that when the market experiences positive performance, volatility will decrease.  Conversely, with an increase in volatility, the market sees a decrease in returns and investors experience increased risk.  With the current state of low volatility, we have to wonder how long the market will remain calm, and when we should be concerned.  

The VIX is the ticker symbol on the Chicago Board Options Exchange (CBOE) that is used to measure the level of volatility in the market.  The VIX is supposed to represent the expectations for the next thirty days, and is commonly referred to as the “fear gauge”.  The VIX uses volatility of various S&P 500 index options, which is derived from the capitalization of 500 of the largest companies listed on the Nasdaq and New York Stock Exchange (NYSE).  

The VIX is one of the most followed equity indices, and is thought to be an indicator of the US economy.

VIX Hits Record Lows in 23 Years

On December 22, 1993, the VIX hit record lows when it reached 9.48.  The historical average of the VIX is typically close to 20, although it has recently been averaging under 10, and on May 9, 2017, the VIX closed at 9.77, the lowest in over 23 years.    

We typically see the market perform well during low volatile times, and that is surely the current situation, although we might wonder if the fear index is truly in line with investor confidence?  The political turmoil we see regularly these days usually brings about uncertainty, although it appears Investors are not yet concerned or waning in confidence.  

What Contributes to the Volatility of the Stock Market?
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News of mergers and acquisitions usually cause market activity, although nothing has been big enough to wake the current sleepy market.   One factor may be that there are simply less players in the market than ever before.  

Less Market Participants

The merger and acquisition business has been booming in spite of Antitrust laws that are designed to prevent monopolies that would hinder competition.  This increase in M&A has contributed to fewer market participants than just a decade ago.  
As stated in a July 2015 article from CNN Money, the number of US stocks publicly listed hit a peak record of 7,562 in 1998.  According to the Wilshire 5000 Total Market Index from 2015, there were only 3,812 publicly listed US stocks.  

Whether volatility is high or low, you can trade with confidence with an experienced team like Great Point Capital.  

Great Point Capital has been serving the trading community since 2001.  Our 100+ prop traders actively trade the firm’s capital, specializing in equities and equity options.  We are one of the very few firms able to offer access to Takion Software Platform, enhancing your trading performance.  To earn to your maximum potential in times of low or high volatility, contact us today to speak with one of our knowledgeable staff.  

Tuesday, August 15, 2017

Pro Trading Firm Has Broad Order Type Availability


You may not be aware that a professional trading firm can replace your online broker, bringing you bigger better returns at a lower cost to you.   Out of convenience, or just lack of resources, we fall to the comfort of trading with an online broker like E-Trade or Ameritrade, but there are actually much better options.  

With lower commission, faster execution for a better quality of trade, and more order types to choose from, you owe it to yourself to see how Great Point Capital can replace your online broker.
  
Directed Orders

You are probably not aware that most online brokers sell your orders to the highest bidder, which is also called “payment for order flow”.  Payment for order flow, (POF), is a widespread arrangement that has been around for quite some time in US Markets.  POF is an arrangement where a third-party firm pays the online brokers to send orders to them, instead of to the open market.  

With professional trading firms, you can direct your order however you like.  See if your online broker allows you to do any of these:

  • Put your order only into dark pools, to minimize market impact
  • Split your order among multiple liquidity pools, and move with the bid or offer.
  • Try to buy at the midpoint, rather than paying the spread. Buying at the midpoint, rather than buying the offer price, saves you .005/share, or $5 on a 1000-share order.
  • Get paid by the exchange by tagging your order as Adding Liquidity Only
  • Use IEX’s new Discretionary Peg order, which is designed to predict upcoming changes to the NBBO, protecting investors against structural arbitrage.  

Professional trading firms have access to a wider variety of order types that will benefit you when either adding, or removing, liquidity.  Trading with the best matching order type with speed and quality execution is the key to higher returns.  

Great Point Capital offers the resources and knowledge to utilize the most advantageous order type, netting the best return on your investment.  

Short Stocks

Have you ever tried to sell a stock short, then your broker declines the order as ‘not available to short’?

Pro firms maintain clearing relationships with firms that have comprehensive lists of easy-to-borrow stocks.  Professional firms like Great Point Capital use third-party locate firms to fill in the gaps, and track down stock for you to borrow at reasonable costs.

Great Point Capital offers the widest selection of stocks to trade by partnering with firms that specialize in locating hard-to-borrow names.  

Advantages of Pro Trading Firms Over Online Brokers

There is a lengthy list of advantages of working with a professional trading firm over an online broker.  

With a professional firm, you immediately gain with lower exchanges fees and commissions, better quality and faster execution of your order, advantageous order type and hard to borrow stocks availability, all resulting in higher returns for you.

If you keep high-balance brokerage accounts to take advantage of opportunities in the market as they arise, or are an active trader trading more than 10k shares per day, you owe it to yourself to look at pro firms like Great Point Capital.

As a FINRA firm, GPC offers you a retail brokerage account with SIPC-insured backing and all the advantages available to professional traders.

Great Point Capital has been serving the trading community since 2001.  We are one of the very few firms able to offer access to Takion Software Platform, enhancing your trading performance with fast and high-quality order execution.  GPC offers professional and experienced wealth management.  Contact us today to speak with one of our knowledgeable trading experts and earn maximum earnings on your trades.

Tuesday, August 8, 2017

Pro Traders Give Quality Execution Over Online Brokers


Did you know that you can have a professional trading firm, one that specializes in complex and sophisticated trades, manage your retail investment account instead of an online broker?  People often resort to signing up with E-trade, Ameritrade or any other online broker out of convenience, and lack of a full understanding of the better alternatives.  

Not only are the fees and commissions usually much less with a pro trading firm, your level of service regarding experienced trading results in higher returns and more money in your pocket.  For a fraction of the cost you’re paying to your online broker, you owe it to yourself to find out how a professional trading firm can provide better service, higher returns, at lower costs to you.  

There is a significant difference between poor execution and quality execution when it comes to how your order is routed and executed, and the majority of online stock brokers do not know the difference.  

Professional Software

Active traders need to see real-time, true quotes, full depth of quotes, information about their open orders and positions, and filter tools to search for the best opportunities.  Utilizing professional software like Takion gives professional traders all these features right at their fingertips, and makes an enormous difference in the quality execution of your order.

The Takion trading platform is built for speed, and it won’t choke when the market gets busy.  Takion offers fully customizable windows and keys that allow the pro trader to set up their trading software exactly how they like it.  

Great Point Capital is one of the few firms with access to Takion, the professional trading platform that gives traders the competitive edge to conduct the most advantageous trades for your order.   

Quick Execution

You can miss trades when clicking through order entry screens trying to take advantage of fast-moving markets.  Paying a higher price for the stock or missing a great trade because of a delay in getting the order into the market can cost you several times what you think you’re saving with the low commission from an online broker.

If you end up paying $65.10 instead of $65.05 for 1000 shares of stock, that’s $50 out of your pocket!  That really adds up if you do it a few times a month.  Professional software like Takion is customizable to where one keystroke enters your order and routes it directly to the market, so you can jump on your price when you see it in the market.

The speed with which professional trading firms like Great Point Capital can route your orders nets you bigger returns with quality execution of your orders.

Great Point Capital is one of the very few firms utilizing the Takion Software Platform, enhancing the quality of trades with high-quality and quick order execution.  We offer experienced and professional account and wealth management, including management of retail accounts. Contact us today to learn how a professional trading firm can replace your online broker and provide bigger returns with less cost to you.