The Wall Street Code
The heartbeat of the financial world is powered by technology. Behind this elusive curtain of algorithms and computer codes operate the real pioneers of Wall Street: the cyber geeks whose efforts could mean the difference between healthy growth and crushing collapse. Produced by the popular VPRO Backlight documentary series, The Wall Street Code draws several of these figures out of the shadows, and seeks to expose their vast yet secretive sphere of influence over the global financial system.
At the center of this investigation stands perhaps the most notorious of Wall Street whistleblowers: Haim Bodek. Empowered by a keen interest in mathematics and physics from an early age, Bodek became a leading innovator in algorithmic trading, a computerized process (otherwise known as high-frequency trading, or HFTs) which allowed orders and trades to be processed at a faster velocity than ever before. When he discovered that his code was being manipulated to operate outside of accepted parameters - essentially allowing a few at the top to cut in line and reap guaranteed profits - Bodek decided to place his livelihood and reputation at risk by exposing the massively rigged system he inadvertently helped to create.
His captivating narrative, which at times plays like a heist thriller, carries much of the documentary, but the filmmakers manage to spotlight a few additional figures of prominence along the way. These include Thomas Peterffy, the CEO of Interactive Brokers Group and a leading developer of electronic security trading; Eric Hunsader, the head of a large market data firm and a vocal critic of high-frequency trading; and several noted financial investigators from The Wall Street Journal.
While The Wall Street Code is replete with complex verbiage related to programming code and financial wrongdoings, it's always presented in an accessible fashion. Even those who don't absorb every morsel of information will understand the central idea. The film argues that technology has mired the financial system in a level of complexity which most find impenetrable; a dynamic that makes it easier for a knowledgeable few to rig in favor of their own interests. Greater scrutiny and simplification is needed if any true change can be allowed to occur.
Directed by: Marije Meerman
2017.10.12: I disagree with Joe Blow regarding "market making" aspect of HFT. In my opinion that isn't really occurring, even if one chooses to say that it technically happens as a result of the trading that occurs.
When Goldman Sachs co locates a massive computer nick named "The Beast" next to the NYSE exchange computer, that is bigger and faster than that NYSE exchange computer, it is seeing the orders come through at essentially the same time but is able to react faster than the exchange itself. Basically looking at the incoming orders and jumping in front of the exchange and everyone else. Joe Blow mentions this to a degree but I cannot call this "market making". It is called "cheating". It is not a level playing field where everyone has access to the same data at the same time. Rigged as was stated. Jumping in front of the market to manipulate it is not "market making".
It is my bet that the GS beast is the devil that cause the "Flash Crash" back when, due to some overlooked parameter in their code. That was a glimpse into the type of coding, which is market manipulation not market making.
I just don't like the hard point of the manipulated rigged game being lost in "market making".
If a person wants to understand how the markets have been manipulated since the early days prior to the 1929 crash or there abouts, read the back chapters of "Reminiscences of a Stock Operator".
Without a true market maker there would be wide swings in the markets at times. It would be scary for a day or swing trader. HFT does not provide that market making unless it is providing that service to low volume stocks or other low volume markets. Unlikely since they make their dough on high volume.
It has been stated in the news some time ago, that 70 percent of a days stock trade volume is High Frequency Trading. Meaning the quants are trying to game each other and who ever else dares step into the barracuda bucket. I don't call that market making.
AWESOME INFORMATIVE .... have to fight against for them.
Far out
Let me know if you find any of the information you are looking for on here. I'm interested in it as well. And I can't agree with you more then just coming back from Africa . People here have no idea about poverty and corruption in governments , that place takes it to a different level.
classic inaccurate missing the point reporting here, frustrating to watch a documentary that is trying to aim at a slightly audience whilst still managing to massively dumb down. Not having a go though film making this kind of thing is incredibly hard...
Good documentary, but like Flashboys lacked the context. What they're essentially arguing against is the presence of is digital market makers. 30 years ago commissions + spreads (the average amount a market maker would make) were much higher. Today HFT has taken the place of the floor market makers, they make less per trade, but there is a lot more volume.
When you boil it down it's really as simple as people being mad that floor market makers actually took more risk when they provided market liquidity to larger orders. Today HFT takes next to zero risk on the transaction (instead their risk in the massive sums spent on improving financial infrastructure), but in my book that shouldn't matter because on average HFT is taking less as a market maker than the old floor guys did collectively off each transaction.
The other thing is that there was a short period of time where HFT market making was really liberalized and anybody with the technical capability could make a market. But then co-location, dedicated microwave towers, granting of different order types, etc. brought back the favoritism in market making (that has long existed) to institutions with deeper pockets and more overall volume.
The last thing is that dedicated/preferential market makers (or preferential market intermediaries) probably doesn't need to happen any more as a practice. One could argue they no longer serve a purpose and that the market is basically in the process of weeding them out (which isn't something that will happen over night, but is happening).
One main thing i get from this documentary is that Haim Bodek didn't do his homework on the order sessions available and let his firm bleed money over an extended period of time. First of all, the order sessions are available to anyone. Secondly, if your firm was bleeding cash over an extended period of time, why didn't you stop and look in more detail into what was going wrong? Seems s*upid to just keep on trading and bankrupting the firm! WTH
A suggestion: go long on gold and guillotines. When the music stops we'll need both.
Interesting observation.
Bring on the Tobin Tax!
An excellent documentary that not only gives insight into the world of the stock exchange, but epitomizes the true nature of all human endeavors. (everything is rigged) So, the next time you want to invest money, or have concern regarding your pension plan, just remember that we are all bottom feeders supporting the select few. I advise everyone to check out this documentary. (5 stars)
Very interesting docu. The bankers make a lot of money, and they probably will continue to do so. But at least today most people realize that it all comes down to a simple scam. Fewer and fewer people believe the glorofying self-image that the "Masters of the Universe" are so eager to maintain. At the end of the day these guys are just street-corner hustlers. I guess the only comfort we have is that at least today it is out in the open that being a wall-street banker is one of the most useless and unconstructive things you can do with your life.
coming from a blue collar background originally. i saw what happened to my parent's "retirement funds". and i shuddered when these guys talked about pension funds being bottom feeders and the many tiered ways the predators just ruined the lives of so many millions of hard working people depending on those pensions when they retired after 35 or 40 years of work. take a drive on state route 2 along the Ohio river from Marietta north-east. hope you guys are proud of the desolation and poverty you created through greed. only one very small slice of working American's reality today. hey, far out, why not take a little trip?
you want to see real poverty you should go see Africa!
Same thieves, different tools. IMF and World Bank are Big Money's poverty generators there.
IMF has wreaked havoc on many 3rd world countries economies. The system of greed keeps giving.
Yes - but African nations aren't under any misconceptions about their system......Americans are living in Disneyland.
Spot on Deborah. I have a friend who emigrated from Russia to the USA for a better life. Now, all he has to live for is the american illusion. When he lived in Russia, he may not have agreed with their policies but at least he knew what they were.
Why bother when people like you will ensure it comes to us?
Any coders and day traders out there?
Whats with listing everyones languages?!?!
I day trade and the more HF/Automated systems are out there the more money for me!!!!
People think the market is getting more complicated and humans will no longer be able to keep up. In fact whats happening is that the market is becoming more predictable!
People and crowds make irrational and unpredictable decisions while automated systems dont. Think about. If all market volume/trades in the market are automated then it will follow a preditable pattern!
until some big hedge fund dumps a few million shares on the market knowing full well that all the algos's will shi*t the preverbial and sell everything...and thus you return to the wilderness of mirrors.
that was the 2008 "crash"... it was a nice time to make money going down and then up again!
i hope you get a moment to look at my post, above.
"Look Mom&Dad! See how smart&strong I am!"
I guess you are not a coder or day trader?
Neither are you! So do us a favor and stop talking s**t you don't know about Pendejo!
Do you remember Long-Term Capital Portfolio L.P.,
Myron S. Scholes, Robert C. Merton?
Odds are you and the rest of the little fish in your school will swim the same route to extinction. You won't be big enough to be in the Fed inner circle on harvest day and you will be wiped out.
Nobody in America will shed a tear for dead piranhas.
Coder & ex Reuters IT tech (Lipper, European HQ). I can only rub my hands with glee in knowing that, eventually, you will bet it all on that 'preditable' pattern. Go on...feed your face...
very disturbing.....!
The documentary 'Wall Street Code' is an exceptional documentary that leaves us hamsters on our daily treadmills to pay the rent realize we are out of the equation! There is certainly something wrong with Wall Street. The FCC does not move … is it lack of brains, fear of what the real insiders will do to them individually or general malaise ???
this guy is my hero except he seems to suck at what he does
why would you draw any lessons from a bunch of lowlife cheaters who front run markets, these people are essentially autistic and would struggle to carry out any kind of productive labor, that didn't involve tricky arcane computer language that exploits the fact their systems are built with premier access and deference from a bunch of other equally corrupt financiers who all dined out on cash from pensions funds.
the whole thing is disgustingly rotten.
here's a useful lesson though; all this bullsh*t front running translates to inflation. which means your money won't buy the same amount of goods and services it did last month. Consider also that they are now doing it on an industrial scale. Rod for their own back comes to mind. OR perhaps more accurately their rod for our back.
If we are to take a lesson on the basic nature of our species from the examples provided in this film it is that the higher one rises above the crowd the more god-like one's self-image becomes. Morality is not part of the zeitgeist of the ultra rich. One can only wonder when the mob will once again storm the castles and teach their occupants the lesson of the guillotine.
Power corrupts, absolute power corrupts absolutely...
True enough, but the trait is more universal I think. The concept of The Elect in Christianity is an example. It is not that the Nazi's were so inhuman it is that humans are never that far from being Nazi's.
that mr. burns is so very true i actually just got goose bumps.
The challenge, I suggest, is to resist the temptation to moralize and accept this part of our nature as something that simply must be dealt with. Like it or not the only possible counter-balance to the abuses of personal wealth is government. Possibly the recent election in the NYC mayor's race indicates the beginning of a trend toward a government "by the people" rather than one bought by the few.
The lesson of the guillotine? That will never happen in the US where individualism and pursuit of personal happiness are all that matter.
Close to 50 millions americans live in poverty... ground for a revolution? No, the rest of them look the other way...
"One for oneself and God for me" that's what America is all about today. Survival of the fittest.
What happens when/if a super majority comes to the conclusion that what is best for them is the destruction of their oppressors?
Also, "the lesson of the guillotine" can be taken figuratively, e.g a political beheading by a populist political movement.
I'm sure you have noted the results in the NYC mayoral contest.
Perhaps this is true about America, but in what other country do you think you can have a better life and more personal freedom? I have done quite a bit of traveling and so far, I'm not packing my bags.