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Themis Trading's 2013 U.S. Market Structure Predictions

From a high-frequency trading firm taking out a Super Bowl ad, to new HFT legislation that includes a transaction tax, Themis offers 10 predictions for the U.S. markets in 2013.

Yes friends, it is that time of the year. It is the time when we start anew, carefully analyze market structure trends in the U.S. equity markets, and release our predictions for what you can expect to happen this coming year in our capital-raising marketplace.

This is not an exact science, mind you – it is an art form that has taken us years to perfect. Two years ago we got one of our predictions correct, and last year we improved and saw 1.5 of our predictions come to fruition. Let us delay no longer – here goes:

  • Following the completion of ICE's takeover of NYSE, ICE will proceed to take out a reverse mortgage on the Mahwah facility. The proceeds will go towards funding fresh golden parachutes. Robert Wagner and Henry Winkler will get board seats.
  • Congress will pass HFT legislation that includes a transaction tax. They will then create a loophole that exempts market makers and members of the Futures Industry Association lobby from said tax.
  • The Bravo cable network will launch a new reality show in which computer programmers compete weekly in algo-challenges; the winner at season's end will get full US citizenship.
  • The SEC will mandate that all dark pools disclose how stocks are priced in their ATS's by no later than the 2nd quarter. Bwahahahahahaha.
  • A major HFT firm will take out a 30-millisecond ad during the Super Bowl. The following day retail investors will inexplicably send in a plethora of market orders on stock exchanges, prompting a flash crash, and HFT's most profitable day ever.
  • More than one major stock exchange will hold an after-Christmas sale on colocation pricing, and another will discount their services using Groupon.
  • A broker dealer in the market structure space will be forced to disclose its monetary ties to HFT industry.
  • The movie Ghost Exchange will break all kinds of box office records, as well as spawn a video game of the same name, where players fight for the best algo to flip securities for gold coin rebates. Joe will be high scorer.
  • Eric Hunsader will take over as the head of the Office of Quantitative Research at the SEC, prompting three large HFT firms to close their doors.
  • Another major power outage will hit New Jersey, not due to a natural disaster, but rather due to overload conditions at exchange data centers from quote traffic. Crew from Ohio will be called upon to save the day.
  • Happy New Year and here is hoping that we don't beat last year's forecasting success!

    Sal Arnuk is partner, co-founder and co-head of equity trading of Themis Trading LLC. Mr. Arnuk has extensive experience in equities trading and is an expert in electronic trading and market structure. He is also the co-author of Broken Markets -- How High Frequency Trading ... View Full Bio

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Themis Sal
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Themis Sal,
User Rank: Apprentice
1/4/2013 | 7:04:21 PM
re: Themis Trading's 2013 U.S. Market Structure Predictions
Happy New Year Matt and Greg,

First let me just get the more important stuff out of the way... Greg... JCP&L is one rung higher than LIPA. What a mess. I did finally break down and buy a Honda genny for the house - wired it too. Hope you and your family have all recovered amigo.

Matt, thanks for recognizing that our predictions were tongue in cheek- the tip-off being Congress would never pass a transaction tax.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
1/4/2013 | 12:58:15 PM
re: Themis Trading's 2013 U.S. Market Structure Predictions
I think the Groupon idea might have legs.

And, BTW, just 2 days ago, I saw a utility crew from Missouri replacing utility poles in my town. I asked one of the workers why they were "back in NJ." His response: "Back? We never left!" His crew has been here for 2 months and they still have work to do!
MSAMELSON069
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50%
MSAMELSON069,
User Rank: Apprentice
1/3/2013 | 6:42:42 PM
re: Themis Trading's 2013 U.S. Market Structure Predictions
Guys - I know this is-átongue-áin-cheek (and it is pretty funny) - but I don't know why you keep bringing up issues with dark pools and their failure to disclose how prices are arrived at within their venues.

We have discussed at length - both in the industry and with both of you directly - that all of the 25 venues we included in our dark pool report released last fall (comprising north of 95% of the liquidity done in dark pools) openly and completely described their participant segmentation capabilities, methods of allocating price improvement among transaction participants and execution protocol in the course of our research. -á

Both of you saw the report. -áSo you know - or should know - this to be the case.

Still you and others continue to put forth statements that - respectfully - are just not accurate.

Don't get me wrong - I think a lot of what you guys to is great and that you bring good color to the issues, conflicts, and contradictions in the market. However, we see far too many issues industry-wide in which simply not true or are taken out of context. -áThat only contributes to "noise" and makes it far more difficult for the casual observer to get the the root of certain market issues.

Respectfully,

Matt Samelson
Principal
Woodbine Associates
MSAMELSON000
50%
50%
MSAMELSON000,
User Rank: Apprentice
1/3/2013 | 6:42:42 PM
re: Themis Trading's 2013 U.S. Market Structure Predictions
Guys - I know this is-átongue-áin-cheek (and it is pretty funny) - but I don't know why you keep bringing up issues with dark pools and their failure to disclose how prices are arrived at within their venues.

We have discussed at length - both in the industry and with both of you directly - that all of the 25 venues we included in our dark pool report released last fall (comprising north of 95% of the liquidity done in dark pools) openly and completely described their participant segmentation capabilities, methods of allocating price improvement among transaction participants and execution protocol in the course of our research. -á

Both of you saw the report. -áSo you know - or should know - this to be the case.

Still you and others continue to put forth statements that - respectfully - are just not accurate.

Don't get me wrong - I think a lot of what you guys to is great and that you bring good color to the issues, conflicts, and contradictions in the market. However, we see far too many issues industry-wide in which simply not true or are taken out of context. -áThat only contributes to "noise" and makes it far more difficult for the casual observer to get the the root of certain market issues.

Respectfully,

Matt Samelson
Principal
Woodbine Associates
Matt_Samelson
50%
50%
Matt_Samelson,
User Rank: Apprentice
1/3/2013 | 6:42:42 PM
re: Themis Trading's 2013 U.S. Market Structure Predictions
Guys - I know this is-átongue-áin-cheek (and it is pretty funny) - but I don't know why you keep bringing up issues with dark pools and their failure to disclose how prices are arrived at within their venues.

We have discussed at length - both in the industry and with both of you directly - that all of the 25 venues we included in our dark pool report released last fall (comprising north of 95% of the liquidity done in dark pools) openly and completely described their participant segmentation capabilities, methods of allocating price improvement among transaction participants and execution protocol in the course of our research. -á

Both of you saw the report. -áSo you know - or should know - this to be the case.

Still you and others continue to put forth statements that - respectfully - are just not accurate.

Don't get me wrong - I think a lot of what you guys to is great and that you bring good color to the issues, conflicts, and contradictions in the market. However, we see far too many issues industry-wide in which simply not true or are taken out of context. -áThat only contributes to "noise" and makes it far more difficult for the casual observer to get the the root of certain market issues.

Respectfully,

Matt Samelson
Principal
Woodbine Associates
Matt Samelson
50%
50%
Matt Samelson,
User Rank: Author
1/3/2013 | 6:42:42 PM
re: Themis Trading's 2013 U.S. Market Structure Predictions
Guys - I know this is-átongue-áin-cheek (and it is pretty funny) - but I don't know why you keep bringing up issues with dark pools and their failure to disclose how prices are arrived at within their venues.

We have discussed at length - both in the industry and with both of you directly - that all of the 25 venues we included in our dark pool report released last fall (comprising north of 95% of the liquidity done in dark pools) openly and completely described their participant segmentation capabilities, methods of allocating price improvement among transaction participants and execution protocol in the course of our research. -á

Both of you saw the report. -áSo you know - or should know - this to be the case.

Still you and others continue to put forth statements that - respectfully - are just not accurate.

Don't get me wrong - I think a lot of what you guys to is great and that you bring good color to the issues, conflicts, and contradictions in the market. However, we see far too many issues industry-wide in which simply not true or are taken out of context. -áThat only contributes to "noise" and makes it far more difficult for the casual observer to get the the root of certain market issues.

Respectfully,

Matt Samelson
Principal
Woodbine Associates
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