Archive for April 1st, 2014

April 1, 2014

Robin Hood Tax

Flash Boys

The Robin Hood tax commonly refers to a package of financial transaction taxes (FTT) proposed by a campaigning group of civil society non-governmental organizations (NGOs). Campaigners have suggested the tax could be implemented globally, regionally or unilaterally by individual nations.

Conceptually similar to the Tobin tax (a small tax on spot currency conversions), it would affect a wider range of asset classes including the purchase and sale of stocks, bonds, commodities, unit trusts, mutual funds, and derivatives such as futures and options. The Tobin tax was proposed for foreign currency exchange only.

read more »

April 1, 2014

Flash Trading

Flash Boys

Flash crash

Flash trading, otherwise known as a flash order, is defined by industry trade publication ‘Traders Magazine’ as ‘a marketable order sent to a market center that is not quoting the industry’s best price or that cannot fill that order in its entirety. The order is then flashed to recipients of the venue’s proprietary data feed to see if any of those firms wants to take the other side of the order. This practice enables the market center to try to keep the trade.’ Under an exception to Rule 602 of Regulation NMS, flash orders are currently legal.

Bloomberg states: ‘Flash systems trace their roots as far back as 1978 to efforts by exchanges to electronically replicate how a trader might yell an order to floor brokers before entering it into the system that displays all bids and offers. Markets have evolved since the days of floor brokers’ dominance, with computer algorithms now buying and selling shares 1,000 times faster than the blink of an eye.’

read more »