Thursday, June 13, 2013

How do the 'Elite' Manipulate the Markets?

Well now we know, and boy did a fight break out in the bar.

Actually the first fight broke out on the TV in the US Room, spread to all those in the room and spilled over into the P&B Bar.

The TV upset is below, but first we will look at the fight in the Bar.

We serve people on a 'first come-first served' basis wherever possible. Some regulars are at the door at opening time and get to the bar quickly. But people coming in early or later do not have to pay more, or less, for their pints.

And the door opens at a set time.

But that ain't what happens in the Market.

The very suggestion by some that the early chaps and chapesses should pay more just for being in early was met with a few scowls from the early-drinkers and guffaws from the latercomers.

Even more disenchantment was seen when some bright spark asked if he could come in and get his pint five minutes before anyone else, and he was willing to pay a few yen extra (or whatever currency was 'up' that day).

Then a really tense moment came when someone suggested that if it were the case that he came in earlier than 'opening time', and paid a little more, that everyone after him should pay the prices that HE determined, not me.

He barely made it out of the door !

But to Markets. There, of course, the early bird DOES actually get to determine later prices, and yes, some DO get in the door before opening time.

This came as something of a SHOCK to some.

That's when the fight started.

Anyway, here is what the TV showed:

EAMON JAVERS: Let me walk you through the story that we broke on our air earlier today. It's based on a contract that we obtained between Thomspon Reuters and the University of Michigan to put out consumer confidence information. And in that contract, Thomson Reuters stipulates that they're going to put it out in three tiers. Take a look here at this graphic which shows you the three tiers of they're putting out the information:
 First, is the public access to data. That goes out at 10:00 in the morning. But at 9:55, five minutes earlier, Thompson Reuters provides elite customers with access to that data. But even earlier that that, at 9:54:58, two seconds earlier, Thompson Reuters provides ultra-elite customers with access to that data in a machine-readable format, and they can trade on it.
 Now here's the real-world impact: Take a look at this chart, that the people over at Madex provided to us. This chart is trading in the SPY on May 17. And what you see is, on the right-hand side, the red line, that's 9:55. What you see here is an explosion of trading at just about exactly 9:54:58. You see that sharp market move up. That gives you the sense that traders are immediately reacting when this early data is going out, two seconds before the 9:55 crowd gets it. And of course, five minutes and two seconds before the 10:00 crowd gets it. Now here's what Thompson Reuters told us about this when we asked them:
 "Details of the tiered release of this data are provided openly to Thompson Reuters customers and the wider public and anyone wishing to trade on this data can pay for the service that best meets their data needs."
 And guys, it is an expensive service. The contract stipulates that Thompson Reuters pays the University of Michigan $1 million per year for exclusive access to that data.

You can see the video, and the charts and the data he was talking about here:

So, we can see just how those 'Elites' with the money can get in FIRST, rig the market and clean up from all the poor suckers who come to the party five minutes late.

It made a change from the usual fights over which man is buying the drinks for which woman and why men have to do all the friggin' drinks buying at all.


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Ne meias in stragulo aut pueros circummittam.

Our Bouncer is a gentleman of muscle and guile. His patience has limits. He will check you at the door.

The Tavern gets rowdy visitors from time to time. Some are brain dead and some soul dead. They attack customers and the bar staff and piss on the carpets. Those people will not be allowed in anymore. So... Be Nice..