Thursday, October 8, 2015

Hillary Pushes HFT Tax (A Day After BlackRock Warns Of "Wild Price Swings")

Following yesterday's flip-flop on TPP, Hillary Clinton has unleashed some new financial system 'policies' this morning, the most crucial of which includes the provision of a transaction tax which will dramatically penalize high-frequency traders (gratifying critics of HFT's instability-creating market structure). The question is, who is she trying to appease with this 'policy'? The answer is simple - Follow the money... once again.

As Bloomberg reports, Hillary Clinton is proposing a tax on the flash boys that may be unlike any in the world.
She wants to penalize traders who use super-fast computers to repeatedly submit and then retract their stock orders by charging a fee for transactions they cancel. The proposal, released by her presidential campaign late Wednesday, will gratify critics of high-frequency trading, who’ve long argued that the industry’s reliance on orders that are never executed is a hallmark of unfair markets, and worse, manipulation.


While a group of European nations have tried to curb rapid buying and selling by proposing a tax on the volume of trades, charging a fee for canceled orders is a new idea.The plan is designed to target “harmful” high-frequency trading that makes markets “less stable and less fair,” Clinton’s campaign said. She plans to formally propose the tax on Thursday as part of a broader plan to reform financial rules.
It appears more lobbying dollars need to be thrown Hillary's way...
A trade group for high-frequency firms said Clinton’s plan was misguided because it would act as a disincentive for equity traders who make markets by submitting a high level of buy and sell orders every day.

“We are in favor of curtailing irresponsible levels of cancellations,” said Bill Harts, chief executive officer at Modern Markets Initiative. “However, a tax on liquidity providers is a tax on investors and the very traders who make our markets efficient and cost effective for those average investors.”
So who is Hillary really trying to appease with this aggressive policy move?
Let's see - just yesterday, the world's largest asset manager BlackRock made a modest proposal to "fix" markets - by shutting them down when there is significant volatility...
Among the fund company’s suggestions: The entire $23 trillion market should automatically come to a halt if a certain number of shares stop trading, giving traders time to regroup on a wild day, according to BlackRock. Tweaking the rules on halts and making all stock openings electronic are among other ideas in a paper published Wednesday by the firm.

BlackRock’s proposals come as money managers talk with market-makers and stock exchanges to identify what happened amid the market turmoil on Aug. 24 and how to prevent a repeat. Trading that day was disrupted by delayed openings, more than 1,000 halts, and wild price swings. The fund company believes that many of its recommendations can be adopted with a minimum of fuss.

"They’re all very doable changes without a whole lot of magic," Barbara Novick, co-vice chairman of BlackRock, said in an interview. "I don’t think they’re going to be contentious. I don’t think they’re going to be difficult."
Simply put, BlackRock hates HFTs because they destabilize their precious ETF business cash cow.
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So, a day after BlackRock calls for curbs on trading to "protect" investors and ensure its ETF business does not get massaccred (a la Black Monday) in the next vicious circle sell-off; Hillary Clinton, having previously gone "nuclear" on short-term capital gains, drops a new anti-high-frequency-trading "transaction tax"... apparently confirming her status as a BlackRock puppet...
Mills was chief of staff for Clinton’s State Department and was general counsel to Clinton’s 2008 campaign. As Politico notes, Mills "has worked for the Clintons for years [and] regardless of whether there’s ultimately an official title on the [2016] campaign, hers will be a key voice." Earlier this year, The NY Post (in an admittedly hyperbolic piece) describedMills as Clinton’s "consigliere" who "knows where the [Benghazi] bodies are buried." Mills also serves on the board of the Clinton Foundation. 
Ok, so what? Now we know who Cheryl is, but what’s she got to do with anything? 
Good question. 
And for the answer, we’ll leave you with the following screengrab which should tell you everything you need to know about why Clinton is now going the nuclear route on capital gains taxes... and pushing for a tax that will kill the high-frtequency-trading business.
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Bonus: BlackRock contributions to the DNC