The Year for Investigations into Drug Makers

As we near the close of 2017, we are not at a loss for corporate scandal, wrongdoings on the part of corporate CEOs and employees.  The pharmaceutical industry has long been at the center of investigations, and lawmakers in 45 states are now taking action.   

Perrigo Co. (NYSE: PRGO), Mylan (MYL) & Many Other Generic Drug Makers

The largest maker of over-the-counter drugs in the world, Perrigo Co., was the focus of a corporate scandal in May when the Department of Justice raided their offices during an investigation into price collusion.  The government was looking mainly at the price of drugs that Perrigo manufactures for skin conditions.

Price collusion happens when companies conspire with each other to generate an unfair market advantage.  Mylan NV (MYL) is one of the companies accused, and you might remember their involvement with the notorious price fixing scandal in 2016 involving the EpiPen.  

On October 31, 2017, investigations into price gouging of big pharma culminated into a large group of US states accusing key generic drug makers of participating in a far-reaching price fixing scheme.  The investigation widened an existing lawsuit by adding many more drug makers and medicines, sending some drug maker company shares falling.  

Attorney Generals from 45 states and the District of Columbia are accusing 18 companies while naming 15 medicines in the lawsuit, which includes the president of Mylan NV and CEO of India’s Emcure Pharmaceuticals. The charges allege the company executives agreed in advance upon prices, price increases and the percentage of market share that each company would have.  

One Attorney General states in the suit that it is their belief that price fixing is pervasive, systematic and exists in a culture of collusion.  

For the most recent company information, trading or investment services you can trust, contact Great Point Capital today.  

Great Point Capital is a member of FINRA offering professional service, wealth management and execution to retail customers.  We are a leader in the equity day trading community with more than 100 prop traders currently trading the firm’s capital with stock leverage. We provide the latest in technology including Takion trading software and our proprietary intra communication platform.  Contact us today to learn how we can take your successful trading strategy to the next level.   

Why Propose HR3555 The Exchange Regulatory Improvement Act?

A new bill was just introduced by Representative Loudermilk (R-GA), that appears to amend the Securities and Exchange Act of 1934 to basically reduce or eliminate regulation overreach into business models of exchanges that do not involve either reporting or effecting a transaction on the exchange.  As Representative Loudermilk stated 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”.

What Could Drive the Proposal of HR3555?

Since the publication of Flash Boys in 2014, there has been a flurry of lawsuits against dark pools and exchanges, amid accusations of market rigging with aiding HFT activity, in essence aiding and enabling unfair trading.  One particular lawsuit alleged that dark pool Barclays, in addition to 7 US stock exchanges, including The NYSE and Nasdaq, manipulated pools to give HFTs market advantages.  Day Traders everywhere were watching the outcome as this has been a frustrating development in the market for quite a long time.  

This groundbreaking lawsuit brought under U.S. District Judge Jesse Furman was a consolidation of one suit from the State of California with four suits from the District of New York, and was eventually thrown out in August of 2015.  Counsel for the defendants claimed that the Plaintiffs rushed into a lawsuit without taking the time to properly plead their case, partially brought on by the allegations in the book Flash Boys.  

The Judge threw out the lawsuit stating that stock exchanges had immunity because their actions fell within “quasi government” powers.

While the exchanges and dark pools may have won the battle, the war is far from over.  

We’ll be watching the outcome of Bill HR3555, and what the Committee has to say.

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.  

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.

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.

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.

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.  

Why Prop Traders Need Control of Orders

In this complex and often predatory market environment, it is of the utmost importance to have control of your orders.  With Payment for Order Flow arrangements, and Maker-Taker allowing multiple market participants to piggy back off your order and capture profits that could be yours, you need to know how to survive and thrive in the current market structure.

For the retail customers that are trading just a few times per month, the amounts made from front running your order is negligible.  But to the HFT firms doing this with thousands of accounts every day it adds up to millions of dollars.  

To the trader with larger accounts trading 50,000+ shares per month, these amounts will add up very quickly.

You need to have greater control over your orders so that you capture extra profit per trade, rather than have your orders sold to someone else.

How to Take Control of Your Orders

The availability of order types that allow you to go directly to dark pools, combined with an increased knowledge of the market, is necessary to enhance your order options and trading experience.  It is also necessary to have experience and resources to place orders at the midpoint of the NBBO, and to capture rebates when adding liquidity to the market.  

Great Point Capital has the resources and the availability of order types, combined with an increased knowledge of the market to maximize your trading returns.  

Rather than selling your orders, we help you to direct your orders to the venue that gives you the best outcome.

Great Point Capital Provides the Tools for Trading Success

Great Point Capital offers modern technology with Takion Software and IT support, beneficial order types, capital, stock loans, flexibility and payouts with benefits.

Technology

Great Point Capital utilizes Takion Software, the most modern trading platform that meets the needs of active traders.  Takion is selective in providing their software to only experienced trading firms.  We employ skilled traders to take full advantage of all capabilities that Takion has to offer.  

Order Type Availability

We offer access to the most beneficial order types, including order types to go directly to dark pools, to place orders at the midpoint of the NBBO, and capture rebates when adding liquidity.

Capital

Great Point Capital gives you the resources to benefit the most from your trading, providing one of the largest capital bases among prop trading firms.  We give you additional leverage that you would not otherwise have, and provide excellent opportunities to earn maximum returns on your trades, without being limited to your personal resources.   

Flexible Location

You can have the flexibility to trade remotely with internet access, or in our offices in Chicago or Austin.  You can trade by hand or develop an automated strategy, the choice is yours.

Stock Loan Accessibility

Great Point Capital partners with firms that specialize in finding difficult-to-borrow names, giving you a wide selection of stocks to trade.

Benefits and Payouts

Registered prop traders with Great Point Capital have access to our group health plan, and enjoy aggressive payouts.

With the multitude of choices available to traders today for routing your orders, it is challenging to know exactly how to take control of your orders.  Great Point Capital has the experience, , capital, technology, and the order types to provide the most beneficial environment for you to take control of your orders and net bigger returns.   

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 select few firms that can offer access to Takion Software, enhancing your trading performance.  For control of your orders and to earn to your maximum potential, contact us today to speak with one of our knowledgeable staff.  

Who Profits on Your Stock Orders?

Third party firms that are paying for orders under a Payment for Order Flow (POF) agreement do not enter into those arrangements to lose money, they are making money as well as the broker they are paying.  Reg NMS says that your broker needs to provide you with the best execution available at the time.  So how can two firms, your broker and the third-party firm paying for POF, manage to profit from your order, while still giving you to best possible price?

Maker Taker

One instance where two firms can profit from your order is when they are getting paid for the liquidity you provide.  If your order is not marketable immediately, they send it to the venue that will pay the most for adding liquidity.

For example, providing liquidity on ARCA for a 1000-share order results in a rebate of about $3.00 that goes to the POF firm who paid your broker for the order.

HFT

The other instance is that the POF firm used your order as part of a profitable trading strategy.

For instance, in heavily traded stocks, a good amount of trading is done at the midpoint of the NBBO (National Best Bid and Offer).  

If the market is 30.24x30.25, and you send your order to buy 1000 shares at 30.25, the POF firm sells you the stock at 30.25 (usually 30.24999, which allows them to jump in front of everyone at 30.25), then they sweep through the dark pools and midpoints on exchanges and buy the stock at 30.245.  This nets a profit of about .005/share, or $5.00, on your order.

The POF firm may also be aware that the market is just about ready to turn and go to 30.23x30.24. They know this through their sophisticated predictive algorithms based on trades and changes in quote sizes, combined with the direct market feeds that are faster than the feeds creating the NBBO.

The faster direct feeds might show the market is already at 30.23x30.24, but the NBBO won’t show that for few milliseconds.  This makes it easier – they can give you the “best execution” available on the current official source, the NBBO, at 30.25, then turn around and immediately buy the stock back at 30.24, which became the true offer in the market.

It is vitally important for traders to have control of their orders.  The amounts made from these orders is negligible for the retail customer that is only trading a couple times per month, but to the HFT firm doing this across thousands of accounts every day it adds up to millions of dollars.  

Contact Great Point Capital today to take control of your orders and seize additional profits per trade.  We have the knowledge of the market, the experience and resources to assist you in routing your orders so that it is most profitable to you.  

If you need a broker with capital, and access to orders including those in dark pools, contact us today to see how we can work together to realize your true trading potential.  

Learn more about Great Point Capital today.  Our 100+ prop traders actively trade the firm’s capital, increasing their leverage and returns.   We are one of the select few firms able to offer access to Takion Software Platform, enhancing your trading performance.  To take control of your orders and to capture additional profits, contact Great Point Capital today.

How to Maximize Your Profit on Your Stock Orders

Great Point Capital has discussed Payment for Order Flow (POF) and how High Frequency Trading (HFT) firms profit on your trades.   We’ve shared how Maker-Taker affects the way that market participants execute trades.  Now we would like to show you what you can do to improve your trading returns within this complex and often predatory environment.

Order Routing Options Limited with Traditional Broker

If you are currently trading through a traditional retail broker, you probably have a limited number of ways for routing your order, if any.     Routing your order is typically limited to a “smart” route, or perhaps a preference for NSDQ or ARCA.  Some of the more advanced firms might let you choose IEX.  These limited choices will not help much, as you do not see the pricing difference between the selections, and you cannot change them easily if something changes in the market.

Traders use “smart” routes, which are simply computerized algorithms that aid traders in buying or selling stock, with the main goal of making the search for liquidity easier.  Smart routes are not a trading system, but are instead a set of instructions that are based on certain conditions set by the trader, and are customized by the trader or pre-set by the broker or software.  Thus, they are limited by the broker, or the software.  In addition to limitation on orders, a trader’s ability to post bids and offers through ECNs is also limited to which venues your broker has subscriptions to use.  

Most retail brokers have agreements in place with third party firms where they get paid for sending orders to them for execution.  This is the obviously the “smart” route if it is one of your choices.  In the past, brokers had networks of people who would work together to execute your order.  Your commission paid for that network and the cost to execute your order.  Today, executing your order is no longer an expense for your broker, but has become a profit center.  

Who Profits on Your Order?

The third-party firms that are paying for orders under a Payment for Order Flow arrangement obviously aren’t losing money on the transactions either, they are making money as well as the broker.  Reg NMS states that your broker has to to provide you with the best execution available at the time.  So how is it that two firms manage to profit from your order, while still giving you to best possible price?

To take control of your orders and recognize additional profits per trade, contact Great Point Capital today.  We have the experience, and the resources to help you route your orders so that it is most beneficial to you.  

Great Point Capital has been serving the trading community for almost two decades.  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.  For control of your orders and to capture additional profits, contact Great Point Capital today.

How Latency Arbitrage Affects the NBBO

Latency arbitrage is a result of several factors including co-location, HFT, flash trading, and SIP latency, all with their own consequences to the marketplace.  Latency arbitrage, however, has a direct effect of contributing to an altered NBBO.  The National Best Bid Offer, (NBBO), is supposed to be the one accurate price of a stock across the entire market, from all exchanges and off exchange venues. It is intended to be a representation of the “best price.” The problem with this intention is that it is impossible to instantaneously update every single participant in the market, even the national exchanges, at the very moment when a change occurs to the NBBO.  

Information about all stock price changes need to travel among all market participants and the speed at which that occurs varies greatly depending upon the distance between the firms, and the technology a firm is using.   This means that all market participants, including the national exchanges themselves, see a different view point of the NBBO at the exact same moment in time.  This information leakage is not the only pitfall of latency arbitrage.  When these privileged firms execute their privileged trades, the NBBO is actually altered by these front-running executions.  

There may be no quick solution to this latency problem, and maybe not even a long drawn out solution, but there are some tools available now that offer some assistance to traders dealing with this problem.  If we cannot stop the latency arbitrage as we know it, we can tackle it another way – with modern day latency arbitrage tactics.

One tool addressing this very issue is the IEX Signal that is used in their proprietary D-Peg® and Primary Peg orders.  The signal acts like a yellow traffic signal, warning a trader of an upcoming change to the NBBO.  Used for a predictive tool, this IEX signal is utilized in these proprietary orders, and is also termed a ‘crumbling quote indicator’.  It predicts an upcoming price change to the NBBO, basically by observing a stock’s NBBO activity, any changes in that price, and then compiling a prediction of which way it’s moving.  IEX’s signal predicts the upcoming NBBO change, and moves their D-Peg orders out of the way, protecting the investor.

This may be one small tool in a very large fight against a long-time practice, a practice the privileged participants are not willing to give up too easily.  With a computer algorithm conducting trades at lightning speed, we all must realize that we are now at a crucial point in the structure of our financial markets. Latency arbitrage must still be tolerated, although the time has come to take action whenever possible.

Great Point Capital has been serving the trading community since 2001 and our 100+ prop traders actively trade the firm’s capital, specializing in equities and equity options.  We are headquartered in Chicago with a location in Austin, TX.  Contact Great Point Capital LLC today, in either our Chicago Office, or our Austin Office, to learn more about how we can successfully trade together with high performance results.  We are one of the very few firms able to offer access to Takion Software Platform, enhancing your online equity trading performance.