So What Happened in July?

Your ballroom days are over, baby.  Jim Morrison

Late Friday afternoon, the Wall Street Journal broke a story on CME  Group that should have everyone nervous. Hackers, believed to be Chinese, compromised the CME security system. The successful attack took place in July amid the worst Bond rout in years and went unreported until Nov.15.

The top 2 Tommy (deaf, dumb and blind) regulators at CFTC, Gensler and Chilton, had already slipped out unscathed. The NFA? Please, have you ever dealt with them? Peregrine, MFGlobal, LIBOR and many smaller others couldn't get a head to roll.  The only common characteristic of the scandals is that they have to blow up to catch the eye of the regulators. The exchange was quick to dis-intermediate the brokerage community but failed to pick up the fiduciary responsibilities. The even deeper scary truth is the internet wasn't built for this.

The now common, Stop Logic or Velocity Logic Events are just the latest smoke and mirror play by the exchange and its gaggle of spoofing, front running, rebate receiving, revenue sharing, close banging "friends," Products from Gold to Bonds are "halted" for anywhere from 5 to 20 seconds whenever they "get loose" as we traders call it. Why? What's the reasoning? More importantly, what's really happening? We call it a Robot Gang Bang but no one should think it's funny. Seems to me this has gotten away from "them"-the exchanges, the regulators, the geeks and the quants. I get the creepy feeling executive suite meetings are stuffed with corporate team players and no one has the guts to admit they don't know what the hell is going on.


One thought on “So What Happened in July?

  1. Lawrence Martin

    Someone on my twitter stream sent this out (seems apropos) “It’s not what you don’t know that kills you, it’s what you know for sure that ain’t true.” – Mark Twain : I have a scary feeling that the controllers of things believe they ‘know for sure’ how this ‘lash-up’ works (cuz some snot-nosed geekster/brainiac told ’em so)


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