17 October 2017
Neil Crammond

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Neil Crammond - trader

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IT NOT JUST TRADERS WHO CHEAT !

01 February 2016  |  2810 views  |  0

Trading exchanges  by charging for data feeds have suddenly perched  themselves above the radar and now serious questions need answering and perhaps addressing ?

 Recent years have questioned whether they have offered / given beneficial trading rights to certain members!  Finally the gloves are coming off as their answers or lack of them are now being challenged by the rest of the membership ; but sadly not the regulator !

       We are all aware that exchanges offer different aspects of connectivity at a price , connection ports , co-location and market data ; they charge a premium to the fastest and therefore enabling them to increase their profits against the slower counter parts . The result being that the exchanges by assisting members improve their marker share and profit  from higher revenues to support their share holders . However does this provide "FAIR & ORDERLY MARKETS" ;or if no one is monitoring allow them to bend the rules ?

  An example is the current faster binary method which certain exchanges have on offer and yet is not generally advertised to the general membership . This Binary method basically acts as an accelerator to the rest of the market ; as their orders are slower ; this method benefits the very few BUT also aids the exchanges who profit from the development work .The Binary orders are simply 200-300 milliseconds faster ; time enough not just to cancel orders but to intercept and overtake and sadly front run the original genuine order ; or put another way the difference to filling 20 % of your daily orders ! Thats a massive difference to the profit margin .  

       The issue here is that although the exchanges have not broken any rules BUT have been very economical with the truth and  by offering identical services to ALL its membership .How do the regulators react and will they ? I  question  if exchanges currently provide "fair and orderly markets" and are they short changing the system, now total transparency is required from exchanges as regulators struggle to play catch up ? 

    The exchanges by charging data fees now have to prove that they not abusing our markets and must now play by the rules and not tjust heir exchange ones ! The lesson being you cannot have your cake and eat it !

TagsRisk & regulationPost-trade & ops

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