Virtu CEO Doug Cifu Explains the Future of HFT (Podcast)
https://www.bloomberg.com/news/audio/2021-03-28/virtu-ceo-doug-cifu-explains-the-future-of-hft-podcast [www.bloomberg.com]
2021-03-29 18:52
tags:
audio
best
business
factcheck
finance
policy
When the GameStop and Robinhood story exploded at the end of January, suddenly everyone took an interest in market structure, and things like payment for order flow, and the role that high-frequency trading shops play in enabling free retail trading. This of course gave rise to lots of conspiracy theories about ways retail traders are taken advantage of. On the new Odd Lots, we speak with Doug Cifu, the CEO of Virtu, which is one of the largest HFT shops in the country, to get his perspective on how this part of the market really works.
Hour long, pretty thorough.
Citi Can’t Have Its $900 Million Back
https://www.bloomberg.com/opinion/articles/2021-02-17/citi-can-t-have-its-900-million-back [www.bloomberg.com]
2021-02-18 01:16
tags:
business
finance
policy
ux
Last August, Citigroup Inc. wired $900 million to some hedge funds by accident. Then it sent a note to the hedge funds saying, oops, sorry about that, please send us the money back. Some did. Others preferred to keep the money. Citi sued them. Yesterday Citi lost, and they got to keep the money. I read the opinion, by U.S. District Judge Jesse Furman, expecting to learn about the New York legal doctrine of finders keepers—more technically, the “discharge-for-value defense”—and I was not disappointed. But I was also treated to a gothic horror story about software design. I had nightmares all night about checking the wrong boxes on the computer.
source: ML
People Are Worried About Payment for Order Flow
https://www.bloomberg.com/opinion/articles/2021-02-05/robinhood-gamestop-saga-pressures-payment-for-order-flow [www.bloomberg.com]
2021-02-05 20:32
tags:
article
business
finance
Okay let’s do payment for order flow again, because people are talking about it and that always stresses me out. Here’s an intuitive description of how it works.
source: ML
SPAC Magic Isn’t Free
https://www.bloomberg.com/opinion/articles/2021-01-08/spac-magic-isn-t-free [www.bloomberg.com]
2021-01-10 00:49
tags:
business
finance
Maybe the biggest capital markets story of 2020 was the boom in special purpose acquisition companies. A SPAC raises money from investors in a “blank check” initial public offering, puts the money in a pot, and goes out and looks for a private company to merge with. 1 In the merger, the target private company gets the money in the pot and the SPAC shareholders get shares in the new combined company; the result is that the target company has raised cash and gone public through the merger. It is an alternative to an IPO that can offer more speed and certainty and perhaps even a better price.
We have talked about SPACs before, but I have somehow neglected to express appreciation for the clever and elegant bit of financial engineering at the heart of the SPAC structure. Here’s how a SPAC works:
source: ML
An Obscure American Automaker Now Has the World’s Fastest Car
https://www.bloomberg.com/news/articles/2020-10-19/ssc-tuatara-is-world-s-fastest-production-car-new-top-speed-record [www.bloomberg.com]
2020-10-20 18:50
tags:
benchmark
cars
SoftBank’s $375 Million Bet on Pizza Went Really Bad Really Fast
https://www.bloomberg.com/news/articles/2020-02-13/inside-the-firings-at-softbank-s-robot-pizza-startup [www.bloomberg.com]
2020-02-18 19:50
tags:
business
cars
food
valley
vapor
By the time Garden headed back down the driveway, he was well on his way to a SoftBank investment of $375 million, with double that money on the table if his business gained traction. But that’s not what happened. Instead, Zume marks one of the biggest recent disappointments in SoftBank’s portfolio. As of this year it no longer makes or delivers pizzas. In January, Zume cut 360 jobs, leaving a little over 300 employees, and said it would focus on packaging and efficiency gains for other food delivery companies.
Levine commentary: https://www.bloomberg.com/opinion/articles/2020-02-14/robot-pizza-trucks-hit-some-bumps
Just, what a closed loop it is. You run a pizza delivery business. You craft a pitch calculated to convince Masayoshi Son that your pizza delivery business will change the world. You meet with Masayoshi Son. He convinces you that you will change the world. Now you are all believers, all in it together. He hands you piles of money. You go home and weep to your friends, “I am going to change the world.” The friends are like “wait what with the pizzas?” But it is too late for skepticism, you have the money, the robots are in the trucks, they are fanning out across town, the cheese is everywhere, they cannot turn back.
source: ML
You Can’t Just Call Loans Options
https://www.bloomberg.com/opinion/articles/2019-11-13/you-can-t-just-call-loans-options [www.bloomberg.com]
2019-11-15 23:14
tags:
business
finance
policy
valley
Also tech companies as banks, the bank of crypto and index funds.
A weird feature of U.S. tax law is that, if you do a thing purely to get around tax rules, then that is bad and a sham and the IRS can look through it and make you pay your taxes. But if you do the thing not only to get around tax rules but also to get around other rules (like margin requirements), then from the IRS’s perspective you have a valid business purpose and you might be able to keep your good tax treatment. “We’re not just gaming your rules, we’re gaming other regulators’ rules too” is, surprisingly, an argument that might persuade the IRS.
The advertising for the Apple card calls it “A new kind of credit card. Created by Apple, not a bank.” That appears to be true of the appearance of the physical card. But the credit algorithms were created by a bank, to Apple’s eventual embarrassment. It is just a little odd that Apple seems to have been so incurious about the algorithms. It’s a tech company!
source: ML
We Could Really Use Some Money
https://www.bloomberg.com/opinion/articles/2019-10-15/we-could-really-use-some-money [www.bloomberg.com]
2019-10-16 01:47
tags:
business
finance
valley
In better times, really not that long ago at all, we talked about WeWork as a clever financial arbitrage, segmenting the market so that it could appeal to debt investors as a boring stable real-estate company while appealing to equity investors as a fast-growing high-multiple tech company. Now, in worse times, it is the opposite: If you invest now, you can get some terrifying debt that lenders don’t want combined with some cursed equity that the stock market doesn’t want.
Did WeWork founder Adam Neumann disturb a mummy and trigger an ancient curse? Was a WeWork built on a haunted graveyard, unleashing powerful dark energies and also elevated levels of formaldehyde? How do you have such a relentless parade of negative financial news and then find out that your phone booths cause cancer? “Our phone booths might cause cancer” was not an IPO risk factor. Nobody had “phone booths cause cancer” on their WeWork Disaster Bingo cards.
source: ML
Don’t Put Your Valuables in the Bank
https://www.bloomberg.com/opinion/articles/2019-07-22/don-t-put-your-valuables-in-the-bank [www.bloomberg.com]
2019-07-30 04:02
tags:
finance
life
On the other hand if you have valuable stuff you can leave it with the bank, and the bank will keep it in a box for you, but that is sort of an accident. It is not a core banking function, not really a banking function at all except for historical reasons. And sometimes they’ll drill open the box and throw your stuff out!
Original story: https://www.nytimes.com/2019/07/19/business/safe-deposit-box-theft.html
It turns out that, statistically, heart surgeons are better at heart surgery than barbers are. What about dermatologists, are they better at sourcing and identifying private-equity and venture-capital investments than private-equity professionals are?
Original: https://www.nytimes.com/2019/07/19/your-money/diy-private-equity.html
source: ML
Who Can Pay Venezuela’s Debts?
https://www.bloomberg.com/opinion/articles/2019-07-12/who-can-pay-venezuela-s-debts [www.bloomberg.com]
2019-07-17 02:20
tags:
business
finance
policy
Also racing sponsorships, credit ratings, ice-water celebrations and Trump on crypto.
This was a good one.
source: ML
Don’t Buy the Wrong Electricity
https://www.bloomberg.com/opinion/articles/2019-06-17/don-t-buy-the-wrong-electricity [www.bloomberg.com]
2019-06-18 19:08
tags:
finance
Second: It’s a thing that happens often enough that ICE Futures has a procedure to report trades like this as errors and adjust their prices. A normal part of electricity futures markets is people buying the wrong contract because they didn’t read the name all the way through, and then going to the exchange and saying “whoops wrong contract,” and the exchange fixing the trade.
Instead he’s accused of doing it basically as a form of … protest art, I guess? It happened to him, he was mad, so he did it to other people “to prove the point that” … that … that you’d be mad too if it happened to you? He was driven by that most universal of human motivations, the desire to annoy other people with the thing that was annoying him. Really it’s the most relatable kind of market manipulation.
source: ML
A New Way of Voting That Makes Zealotry Expensive
https://www.bloomberg.com/news/articles/2019-05-01/a-new-way-of-voting-that-makes-zealotry-expensive [www.bloomberg.com]
2019-05-03 21:02
tags:
policy
The tool is called quadratic voting, and it’s just as nerdy as it sounds. The concept is that each voter is given a certain number of tokens—say, 100—to spend as he or she sees fit on votes for a variety of candidates or issues. Casting one vote for one candidate or issue costs one token, but two votes cost four tokens, three votes cost nine tokens, and so on up to 10 votes costing all 100 of your tokens. In other words, if you really care about one candidate or issue, you can cast up to 10 votes for him, her, or it, but it’s going to cost you all your tokens.
source: HN
The Triple Lizard Is a Love Story and a Cautionary Tale
https://www.bloomberg.com/opinion/articles/2019-03-28/french-lender-natixis-loses-big-on-triple-lizard-trades [www.bloomberg.com]
2019-03-30 02:50
tags:
business
finance
A lot of banking businesses are mysterious, but the exotic-derivatives business is actually very straightforward and normal. It is a sort of manufacturing business. You think about a product that customers might want, a need that they have that can be filled by a product you can build. Once you have an idea for a product, you design it and figure out how to manufacture it efficiently.
Unlike in a regular manufacturing business, you are not exactly manufacturing the product, delivering it to the customer and walking away. In fact manufacturing a derivative normally requires continual trading — “dynamic hedging” — throughout its life. You are manufacturing it prospectively; you sign up the trade, give the customer her money, and then spend the life of the trade trying to make it worth what your model said it was worth.
Triple lizard! Wouldn’t you buy a triple lizard just for the joy of saying it? “Give me three triple lizards please!” Who even cares what they are, they’re triple lizards.
source: ML
Every Move You Make, WeWork Will Be Watching You
https://www.bloomberg.com/news/articles/2019-03-15/every-move-you-make-wework-will-be-watching-you [www.bloomberg.com]
2019-03-19 00:56
tags:
business
hoipolloi
opsec
valley
Of the company swag worn by WeWork employees, one T-shirt slogan says a lot about where the shared workspace business is headed: “bldgs=data.”
One New York law firm wondered if it needed more conference room space. WeWork’s study included placing battery-powered thermal sensors under conference room tables to measure how many pairs of legs were present and for how long. Its finding: Make conference rooms smaller since they’re rarely full. When a New Jersey consulting company wanted more employees in the office on Fridays, WeWork analyzed a year’s worth of badge swipe data.
source: ML
Who Can Say What California Means?
https://www.bloomberg.com/opinion/articles/2019-02-27/who-can-say-what-california-means [www.bloomberg.com]
2019-02-27 18:33
tags:
business
finance
policy
social
valley
Imagine, as I do every day, being the Tesla Inc. “Designated Securities Counsel” whose job is to review Elon Musk’s draft tweets before he sends them out. (Bloomberg News calls this unnamed but undoubtedly accomplished lawyer “Musk’s Mystery Twitter Sitter.”)
Wherein Matt Levine then proceeds to imagine the discussion that must have taken place.
I think these tweets are fine. If you don’t, you have to explain to me, specifically, how they violate the settlement.
I am not giving you a formal legal opinion that it is illegal for you to tweet “California.” I am just telling you that it’s dumb.
Apparently the compromise was that Musk tweeted the tweets, but first he changed his Twitter name to “Elon Tusk,” with an elephant emoji, to make them … less official? Less contemptuous? More annoying?
source: ML
Warren Buffett’s Stocks Went Down
https://www.bloomberg.com/opinion/articles/2019-02-25/warren-buffett-s-stocks-went-down [www.bloomberg.com]
2019-02-27 06:00
tags:
business
finance
Also a poison pill, BlackRock private equity, Windstream and a decacorn.
Last year Sinovac Biotech Ltd., a U.S.-listed Chinese biopharmaceutical company incorporated in Antigua and Barbuda (why not), held an annual general meeting of shareholders to re-elect its board of directors. Some shareholders showed up at the meeting (in Beijing) and took the board by surprise by demanding to vote for different directors. This is generally viewed as somewhere between “extremely impolite” and “totally illegal,” because: Who goes to shareholder meetings? In most of the world, most of the time, the answer is almost nobody; all of the business of the meetings is conducted by proxies. If you want to nominate directors, you send in a notice months in advance, and navigate a bunch of tricky procedural formalities, and if all goes well you get to send a proxy card to all the shareholders asking them to vote for your directors, and if more shareholders send back proxies for your slate than for the management slate then your directors get elected. You don’t just show up at the meeting, nominate your directors and ask for a show of hands. The company’s managers will quite properly tell you that you are out of order, and you will respond “the whole system is out of order,” and there will be a lot of shouting and confusion.
And then it gets really weird.
We have talked a lot recently about the question of who controls a corporation, and I have consistently pushed back on the naive view that shareholders “own” the corporation and get to choose its managers and directors and control how it operates. Here some shareholders wanted to vote out the old directors and vote in some new ones, and their new directors got more votes than the old ones did, and not only did this not have the effect of replacing the old directors with the new ones, but the old directors have decided to punish the shareholders who voted against them by taking away some of their shares. Whatever is happening here, it is hard to see it as the shareholders owning the corporation.
source: ML
This JPMorgan Health Conference Is So Packed Attendees Are Meeting in the Bathroom
https://www.bloomberg.com/news/articles/2019-01-11/jpmorgan-conference-is-so-packed-attendees-meet-in-the-bathroom [www.bloomberg.com]
2019-01-12 10:44
tags:
business
valley
But with every restaurant, lobby, public park and cafe within walking distance of the J.P. Morgan Healthcare Conference’s headquarters packed by thousands of attendees, meeting space was at a premium. One hotel restaurant was charging $300 an hour to sit at a bare wooden table. At the Westin St. Francis hotel, which hosts the investor meeting, the women’s bathroom didn’t have drink service, but it did have several marble vanities and plush leather chairs.
source: ML
The Big Hack: How China Used a Tiny Chip to Infiltrate U.S. Companies
https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies [www.bloomberg.com]
2018-10-04 19:52
tags:
article
business
hardware
opsec
security
vapor
Earning the Right to Get Swindled
https://www.bloomberg.com/view/articles/2018-09-24/earning-the-right-to-get-swindled [www.bloomberg.com]
2018-09-26 18:11
tags:
finance
policy
What kind of company do you think will want to raise $1,000 at a time from poor-but-credentialed investors, but won’t want to go public? Is the answer “the very good and fast-growing kind”? Really?
I have written before about my own fantasy for consumer securities regulation, which would solve all of these problems but which would probably face some political hurdles in getting enacted.
Anyone can also invest in any other dumb investment; you just have to go to the local office of the SEC and get a Certificate of Dumb Investment.
source: ML
Elon Musk Is Working Too Hard
https://www.bloomberg.com/view/articles/2018-08-17/elon-musk-is-working-too-hard [www.bloomberg.com]
2018-08-20 01:28
tags:
business
cars
social
valley
Still, if you read that Times interview, and look at the last two weeks in the life of Tesla, you could reasonably conclude that short sellers are trying to sabotage Tesla, and that it’s working. It’s just that the weak link they’re targeting for sabotage is not Tesla’s intellectual property, or its assembly line, or its financing sources, or its “narrative.” They’re targeting the CEO. The sabotage goes like this:
1. Short Tesla stock.
2. Tweet mild criticism of Musk.
3. Watch him spend hours spiraling into rage and depression, ignoring the urgent work of his job, lashing out on Twitter, arguably committing securities fraud and generally driving the stock price down.
Musk: “I was not on weed, to be clear. Weed is not helpful for productivity.” Neither is Twitter, bro, neither is Twitter.
source: ML