So this was updated as I was typing, please see links below.
After a good morning of giggling over the misfortunate marketing roll out of the 'salons' at the Washington Post, I decided to check in with the NYSE to see how the ol' nest egg is doing. I also check in on the goose before long holiday, let it know the gander is taking a gander.
One of the major reasons I supported President Obama in the General Election was his promise of transparency and sunlight in both the government and financial markets. See, I got this thing about being lied to, especially when it is my money and I view public data on the markets daily.
No one likes to playing in a casino where you're blatantly cheated or never allowed to leave the door with your winnings. The only possible worst case scenario of that situation, is if the casino also did not even let you know what game you are playing.
This is just what happened at the NYSE.
NYSE Regulation department has announced the Decommissioning of the Daily Program Trading Report (DPTR)
(Warning, PDF Document, you know, for ease of 'transparency'):
http://apps.nyse.com/...
The New York Stock Exchange LLC ("NYSE") will be decommissioning the requirement to report program trading activity via the Daily Program Trading Report ("DPTR"), which was previously approved by the Securities and Exchange Commission (the "Commission").1 The last trade date for which member organizations will be required to file the DPTR with the Exchange will be July 10, 2009 and therefore the last required date to submit the DPTR will be July 14, 2009.
In the 2007 rule filing, the Exchange proposed to eliminate DPTR. The 2007 filing noted that there was some duplication between the DPTR data and the audit trail information that member organizations provide to the Exchange via account-type indicators at the time that they submit program trades to the Exchange... [A]fter consulting with the SEC, the Exchange announced that it would delay implementation of the two redefined account type indicators, and pending such implementation, member organizations would be required to continue filing the DPTR with the Exchange. The current delayed implementation date of the redefined J and K account type indicators is June 30, 2009. Accordingly, the Exchange still requires member organizations to submit DPTR.
The Exchange has filed with the SEC to implement the decommissioning of the DPTRrequirement following the July 10, 2009 trade date. Accordingly, the last required submission of the DPTR will be on July 14, 2009, which is the second business day after the last trade date for which the DPTR is required.
In addition, in connection with the decommissioning of the DPTR, the Exchange will not be implementing the proposed redefined program trading account type indicators (J and K) and will continue to use the existing J and K audit trail account types. Upon further analysis and based on industry input, the Exchange has determined that these redefined account type indicators do not enhance the regulatory audit trail because the proposed redefined J and K could subsume some of the other, more granular account type indicators that the Exchange currently receives. Accordingly, the Exchange has determined not to redefine the J and K account types in the manner previously proposed, and is instead leaving the J and K account-type definitions unchanged.
The Exchange further notes that it will use the existing account type indicator data – which captures program trade information for those orders sent to and executed on the Exchange – to report to the Commission on a weekly basis the program trading statistics for portions of program trades executed on the Exchange. Accordingly, beginning on July 23, 2009, the Exchange will provide the Commission with its weekly statistics on program trading based on account type indicator data rather than DPTR data. Similarly, at the same time, the weekly statistics regarding program trades that the Exchange provides to media outlets will also be derived from account type indicator data rather than the DPTR.
Arcane, I know. But this data is very important as it is raw and undefined and public, the very definition of transparent. Without this data, investors will no longer have access to who is trading what and where in the Partner Trading program. This is what is known as a "dark pool."
Know who used dark pools as their primary tool? Madoff.
Maybe the fact that the dark pools were cutting into the NYSE trading volume has lead to this move, but at the end of the day, the American people were promised more transparency, especially on Wall Street.
Maybe some major firm used their influence on the NYSE to end this practice of transparency before they liquidate their position.
Maybe, say a Goldman Sachs or a Barclays, needs move their capital in such a way that it would be viewed as a manipulation of the market, if that market data was supplied.
Or maybe someone is just a big a dummy as the person who suggested the 'salons' at the Washington Post.
One should never underestimate the stupidity of large organizations. At the end of the day, that does not matter though, because we, the American people, were promised the exact opposite by the Obama during his administration.
If the NYSE is allowed to discontinue their Daily Program Trading Report, an investor while not only not know what game they are playing, but who is also sitting at the table.
Basically, Liars Poker, which got us into this mess in the first place.
Contact these fine men for an explanation, maybe you will have more luck than I did:
Robert Airo, Senior Vice President, NYSE Euronext at (212) 656-5663 or
Aleksandra Radakovic, Vice President, NYSE Regulation at (212) 656-4144
UPDATE:
So I went looking for an html version of that doc before I hit preview, and wouldn't you know it, Matt Taibbi is already on the case:
New York Stock exchange covering for Goldman Sachs?
By Matt Taibbi
http://trueslant.com/...
In a move set to infuriate and send many Zero Hedge readers over the top, the NYSE has taken action to make sure that nobody will henceforth be able to keep track of the complete dominance that Goldman Sachs exerts over the New York Stock Exchange. This basically ends our weekly Program Trading updates disclosed every Thursday indicating that Goldman has singlehandedly captured all of NYSE’s program trading.
via Zero Hedge: NYSE Halts Transparency, Feels Goldman Program Trading Disclosure Is Unnecessary.
I’m sorry I didn’t post this earlier, but I urge readers to go over to Zero Hedge and check out this post about the NYSE’s recent decision to change its procedures... to protect Goldman Sachs from bloggers like Zero Hedge!
This is complicated stuff (for people with no financial background, like me, it’s nightmarish) and I have a longer thing about this coming out later. But the essence of this story is that Tyler Durden over at Zero Hedge has, for months, been complaining that Goldman has been manipulating the NYSE, in particular manipulating program trading in somewhat the same way (although perhaps not to the same extent) that they manipulated the commodities markets. In order to make his case — and his theory has gained a lot of acceptance, to the point where Goldman had to respond to the allegations publicly — he has been analyzing data the NYSE releases on program trading every week.
So what happened this week? The NYSE announced that it will no longer be releasing its weekly program trading data. This is quite obviously a move designed to make it even more impossible to track what’s going on in the NYSE and shield, in particular, Goldman Sachs. Let’s hope there’s a public uproar about this; Zero Hedge posted contact info for NYSE officials, and has urged readers to petition the exchange to restore the old rules in the name of transparency.
More on this later.
Sorry I never took the pen name of Tyler Durben so seriously, but I do believe he might be on to something. As soon as I heard the Goldman Sachs, I facepalmed. They wouldn't, would they?
Oh yes, they would, even after all those promises from the Obama administration for open transparency, Goldman Sachs has that kind of nerve.
UPDATE 2: Let's take Matt's advice and see what Zero Hedge has to say. And to begin with, they have the PDF is some kind web format we can all read:
http://www.scribd.com/...
NYSE Halts Transparency, Feels Goldman Program Trading Disclosure Is Unnecessary
Posted by Tyler Durden
http://zerohedge.blogspot.com/...
Basically this is the beginning of the end of unmodified data transparency. Going forward the NYSE will provide whatever data it feels comfortable, after sufficient internal "audits," and media outlets such as Zero Hedge, which had presented its millions of readers the only data point about Goldman's complete encroachment of not only NYSE but Program Trading, will be henceforth unreliable and likely will present no useful information at all.
This is a travesty, as well as a complete obliteration and a mockery of the move for transparency that the Administration, Regulators and Exchanges have been posturing they support.
"Tyler" also supplied a link to the research he has been doing on the Program Trading and the growing dominance of Goldman Sachs:
Observations On NYSE Program Trading
Posted by Tyler Durden
http://zerohedge.blogspot.com/...
Recently, there has been quite a bit of discussion of Goldman Sachs' principal program trading dominance in the NYSE, culminating with none other than Goldman Sachs themselves providing their perspective on the matter, via spokesman Ed Canaday:
The NYSE report that Zero Hedge discussed shows Goldman Sachs trading over 1 billion shares in the principal program trading category. What the table doesn’t show, but a deeper look at the numbers reveals is that the vast majority of this total is trades by our quantitative trading desk. This desk is participating in a relatively new NYSE program called Supplemental Liquidity Providers. The NYSE started the program to attract liquidity to the exchange. As an SLP, this the desk makes markets in NYSE stocks. They often do high-frequency trading (which is simply auto-quote market making) where they send out hundreds of "baskets" of stocks at one time. Program trading, as defined by the NYSE report is any strategy that sends out a "basket" of 15+stocks at one time. I am happy to discuss this with you if that description doesn’t make sense.
In order to dig deeper into Canaday's statement, Zero Hedge performed a historical analysis of NYSE Program Trading (PT) data (which is public) and came up with some curious observations.
As regular readers of Zero Hedge know, the topic of market liquidity has been a major one over the past 3 weeks, and I have demonstrated that traditional market neutral, high-frequency quants, aka independent liquidity providers have not only suffered significant P&L losses in April, but have deleveraged to a point where their presence in the market is negligible, resulting in dramatic volatility spikes on low volume. Could it be that Goldman is singlehandedly benefitting from being the liquidity provider of last resort, even more so as there are virtually no other participants in the SLP program? And, as is expected, with a liquidity "monopoly", come unprecedented opportunities to take advantage of this, depending on one's view of the market. Of course, Zero Hedge is not suggesting Goldman has done this, but in a world where so little transparency exists into the core workings of the equity market, which most market traders have been clamoring has a "very fishy feel" about it, with Hard To Borrow notices appearing for such major index hedging securities as the SPY and IWR, it is no wonder that explanations are being sought.
Here are the charts in question:
http://4.bp.blogspot.com/...
http://4.bp.blogspot.com/...
Trifacepalm with a pike and back flip. No way. There is no way this is happening.
I may wind up eating my hat and words over this, but I am willing to go out on a limb here:
The reason the NYSE is ending the DPTR is not because dark pools are taking away their volume, the NYSE is ending the DPTR to make the SLP a dark pool for Goldman Sachs.
Now that my friend, is juice.
.