High frequency trading

[kwagga]

RSG had an interesting chat with Russell Loubser yesterday. He mentioned that two things are beginning to take shape on the JSE, and it seems that this is a worldwide phenomenon - People are becoming more risk adverse and trades are becoming more and smaller. I was beginning to wonder if automated high frequency trading would ever take shape in South Africa.

[SimonPB]

it's happening .. in their results it was referred to as adding volume to the JSE ..

[kwagga]

Do you know of any SA companies\banks\institutions doing that ? I would have thought that liquidity would be the main concern with HFT in SA.

[#4]

What is the idea of high speed trading? Am I correct in saying offers to sell are given and then the offers are withdrawn just before buyers can buy? Is the gist this: The tempted buyer is continuously offered a higher price and it is continually withdrawn, thus driving the price up?

[HateGauteng]

Heaps of small trades done very fast (faster than human eye can see) with the aid of some supercomputer. But I like your idea!!!

[SimonPB]

I assume they only focus on high liquid stocks .. and as too who, well is it HFT or algo trading, later all market makers do it, so all the big banks, satrix, etc ..

[kwagga]

Not quite as simple as that: http://en.wikipedia.org/wiki/Algorithmic_trading

[SimonPB]

supercomputer ??? now there's a blast from the past .. haven;t heard that since the 880's mon .. heck my nokia is a supercomputer ???

[kwagga]

Beauty of it is you don't need a super computer, just massive bandwith between you and the JSE and well written trading software.

[SimonPB]

you don't even need massive bandwidth .. data is tiny ..

[kwagga]

Ok, maybe not massive bandwith, but your order need to be on the market first, which means you need a quick, reliable link to the JSE's trading engine.

[SimonPB]

ya, ou want a server in the JSE basement ..

[kwagga]

No Simon, you want a GL server in the LSE basement.

[SimonPB]

ya, even better ..

[kwagga]

What trading platform does SBK use ?

[SimonPB]

GL

[SimonPB]

well actually my call center and dealers use GL .. but more boradly we also use hermes, an others ..

[DST]

More on this at...

http://www.tickertalk.co.za/blog.php?user=leopold&blogentry_id=1635

http://www.tickertalk.co.za/blog.php?user=Antonk&blogentry_id=1910

http://www.tickertalk.co.za/forum.php?c=topic&op=index&cid=30&tid=377

[kwagga]

Right - so that's the options. API's into GL, Hermes or Tradecis.