YouSaid · the spoken record

Keith Ross

lines on the record: 103
first: 2016-04-08
most recent: 2016-04-08
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Six years ago, the more people I think I get it. I mean, it has dampened down quite a bit. I think several factors. One is the stock market's much higher than it was five years ago. It's recovered dramatically. Sure. So people look at their 401k and they don't have to jump out the window anymore. Right. So just in general, that helps a lot for people to feel better about the market.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“During the flash crash, the reporter decided to put it on the record. The world assumed that everyone turned off their machines and walked away, and we're not making a market when in fact I know. A lot of good firms took advantage, literally took advantage of the opportunity and made a lot of money.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have the capability to turn them off? I mean, our compliance systems are in sync enough that we could if we needed to. We'd prefer to have the broker deal it do it because they know exactly where the client is and what the client's expectations are.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we're not the broker dealer of record? So it's up to us to inform the broker dealer, and then it's up to him to decide what to do with it”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. And most venues, including PDQ, have limits on the number of orders on the same side in a given security that any one client consent. So that If we see more than a couple orders in one second, same side, same price, same customer sending the order.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm away from. Being on the front line the way I used to be at get go. Everyone is so fast and so on top of their game, so to speak. I would think it'd be extraordinarily difficult now. But I can't say that it doesn't happen. I don't know for sure.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Expect the SEC to use their disruptive trading card and say you were trying to disrupt trading, this doesn't make sense. You know, you're fined or whatever the results are.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, you have a chance to. Well, it's an attempt to overwhelm the quote system so that people can't really understand where the market is.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Except the person that gets the report. I believe that's been Sequenced so that everyone gets the information at the same time. But there was an opportunity.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, no, what they did was they'd leave it in the marketplace till they got a fill. And at the time, the mechanics behind reporting the fill was quicker than changing the quote. So the fill would tell them that the quote was changing.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Once it gets posted at the matching engine or at the venue, the matching engine would be actually executing a match. Once it's posted and everyone can see it, I think It's declared in fair game, absolutely.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, if you're not. Yes. And so for the high speed guys, the reason they need to co-locate is they have to compete with each other. They're sharks fighting over anything that might be there. And they're very worried that if they're too slow, they're going to be the victim.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. To software operating at high speeds. Many of the venues measure their cables so that everyone has the virtual same distance to the matching engine. That's amazing. So the CME does that, I know, for sure. And it's in an effort to try to level the playing field.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, they probably created the whole idea. In terms of doing it electronically, co-location and position in the pit 25 years ago was also incredibly important. And people would get up at 4 a.m. to make sure they had their spot next to their favorite broker so they could deal with him and trade his flow. So it's not new. It's just got a different shape. And it fascinates me that Now that orders are done and completed in milliseconds and microseconds, essentially the world seems to be displaced by it, where it used to take minutes, if not hours, to get a trade done, and it didn't seem to be an issue.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a matter of debate whether they're spoofing or not. What's the actual intent? It's really, really hard to define and certainly going to be very hard to prosecute someone.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The SEC and FINRA both creating rules around these types of events. They have yet to actually define spoofing or layering. But what they did define over a year ago was disruptive trading. And I think that's much easier to focus on because it doesn't necessarily imply intent. So spoofing implies intent. I wasn't really meaning to trade. But if you've put those orders in and there's so many risk parameters in place for you to put those orders in, meaning you've got to have enough capital in case you get filled, that you can do the trade.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“In a microsecond seems Yes, I'm being somewhat facetious. One person's bluff may be another person's brilliant move. Or defensive move Interesting to me that when the commission decided to focus on these issues,”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“There you go Sure. They will capture the spread on those trades, which is fine. But to the consumer, it looks like a free trade, which is fine.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Every single person, this is Schwab and Emeritrade. Trying to remember some of the other Scott trade maybe wasn't interactive brokers, but a who's who of retail. Said, here's what our wholesalers do. They help us build our infrastructure, the metrics that we track with them in terms of percent price improvement, quality inside the spread, quickness of response, number of trades that they don't fill that get sent out to the marketplace. All those metrics have gotten better over time. This was in, I believe, January of 2015. They're thrilled Payment for order flow is just a different way of giving that spread capture to the dealer. Commissions have collapsed for retail folks, $7.95, all you can eat on a trade. I mean, it's virtually nothing.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I have no issue with it, and let me explain why Just over a year ago, conference in New York, five different buy side, excuse me, five different retail brokers. On the dais talking about their experience with their wholesalers, to say it was a love fest is an understatement.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we're consolidating it in this process. And interesting to me, I mean, I think it's somewhat ironic that this process replicates the way the floor used to work or the way an active pit would work in Chicago, let's say.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not the side, the size, or the price, and ask that question, where is the market in Apple? The high frequency folks, the providers, the institution, anyone who wants to provide liquidity then has to respond with a committed order. That committed order is aggregated into a book, and then that book is used.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Everyone has to stop and go through the turnstile. They've made an effective business out of convincing people that that's helpful. I think it's more helpful if you take that pause, share the symbol only. This is an incredibly important part of the equation.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“With the speed advantage or We reverse the flow. So IEX, all they do is it's a speed bump for people to get in and out. It's like turnstile at a door.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“But here's how you solve that problem. If you have a structural pause that can do good things for the order, at PDQ we can consolidate orders from other venues.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No one even knew, right? So that's actually a good thing. So, you know, we get a star for that. The difficulty with the fragmentation, so the generic answer would be innovation. Innovation has come through ATSs, has forced the stock exchanges to compete with each other, again, has driven costs down, taken a lot of people out of the equation. There used to be many more bodies on the floor and on trading now. It's empty. Really changing dramatically. You go to New York.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“100 or 5 So two parts to that answer. One is it actually is redundancy if you look at it a different way. A little while ago, this New York Stock Exchange was down for four hours.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it should be risk transfer among consenting parties. And so, beside the risk transfer process, which is the matching of the trade, you also want to know that it's going to clear properly. If you're a buyer, you're going to get your securities. If you're a seller, you're going to get your money. So it's the first step in a chain of several events that worked flawlessly through the financial crisis for the listed exchanges. The issue was in the over-the-counter credit swaps and some of those issues where everyone became suspicious of their counterparties, required more margin. And companies that had tens of billions of dollars two weeks later were needing to be rescued.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Through an exchange or a third party, Because then the third party manages the risk, and they know where all the risk is from all the participants.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's just a different fashion. I think the regulators actually after the flash crash with some of the things they put in place limit up, limit down. Attempting to get the venues to synchronize with each other are certainly going to go help us move forward to create confidence in the market structure. But systemic risk, interestingly to me, during the crash, none of the listed and cleared futures options or stock exchanges had any issues. It was only the over-the-counter trades where there wasn't a central counterparty. The central counterparty is to me the linchpin of creating, eliminating systemic risk. And Dodd-Frank, all 700 whatever pages of it, should be one page. Everyone has to centrally clear their trades no matter what they are.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's got to be true systemic risk is very hard to understand and know. There's always been systemic risk. So it's not as though it didn't exist before electronic trading.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“As an ATS, I applaud them and appreciate their innovation. As an exchange, their protected quote, hidden behind the delay, could be very problematic. And my concern is other exchanges imitate IEX if they start to get market share. We would have the situation of quotes that are not valid because they're being canceled, but no one knows because the cancel is going through the speed bump”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Again, I'll go back to my comment earlier that liquidity provision is a service. If you want to be able to trade and transfer risk whenever you want, someone needs to stand there and take the other side. The way money has always been made in the markets is to capture spread between the bid and the ask. That's done very quickly now and very scientifically. So it's not that the game has changed, just the players have changed.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Volumes have dried up. Let me share a quick story around efficiency that I like to tell. If you buy or sell a house 5% commission, when you go to Starbucks and you buy a latte with your credit card, you pay MasterCard or visa 3% commission on a $3 latte. So that's nine cents. If you trade 300 shares of Starbucks and you're an electronic market maker, they make about three cents per hundred. So they're going to make the same nine cents that you gladly play Visa for your latte, and yet they're going to trade $25,000 worth of stock and take risk while they're doing the trade. Their margins are so infinitesimally small. There's no other capital transaction anywhere that comes close to that type of efficiency.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“World was in a tizzy, it appeared that the high frequency guys were making a lot of money. They had a tremendous 2009, 2010, but they're not making that much money anymore.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, the markets are rigged And it's a perfect headline, it's the perfect marketing way to get your book sold to hundreds of thousands of people. The issue is if you listen or read the book, what they really said was it's possible that the execution of an order in the marketplace is rigged. Later on, when Michael Lewis was asked, do you invest in the stock market? He says, oh, yeah, I've owned ETFs for years and 25 years my family's always been an investor. So, when the market is rigged, that headline screams, it's a three-card Monty game. There's no way you can win. Absolutely untrue. Buy your Apple 20 years ago. You're a happy guy today. So. That nuance is totally lost in a 60 minutes piece.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Malcolm Gladwell and Michael Lewis, a 70 minute love fest between the two of them. What helped me the most was when Michael Lewis explained what I do is I find a person I'm interested in and I write their story, which is exactly what he did in the book. My issue is as a treatise on market structure, he never talked to any of the exchanges, any of the other ATSs, any of the high frequency traders, any of the electronic algorithm people that are in the business. So it's one view from one person. And I don't think it's a whole picture of the marketplace.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I actually wrote a review of the book the day after it came out. So I got it on my Kindle and read it electronically overnight. Fascinating story. I'm a Michael Lewis fan. He writes great novels, but it's a novel. So, the issue that I have is it's the story of Brad Katsuyama, which is a fun story.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Certainly, the counter argument to that was explained extremely well in a book by Kovic, I believe Peter Kovic. Flashboys Not So Fast. It was the”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Whatever security is at whatever the price is, which is fine at the moment of the trade, but one tick later, one of the parties has been disadvantaged. And when I was on the floor, used to trade with people and you'd confirm and you'd smile and you'd say thank you. And then one second later, you'd say, that son of a gun, he just picked me off, right? Because the tick went against.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm just saying that's certainly a possibility that's never talked about, that it's price improvement for a contra party. Certainly, the sniffing ability is only an educated guess. Just the way people used to do in the market back in the day. So they can't see the order. That's a myth. And the models understand supply and demand, and they're trying to find that balance between supply and demand all the time. All of a sudden, if there's a big demand, the supply is going to move their price higher. Much ado about nothing, in my opinion, and what I'll do is I'll say this, most of the people that talk about that don't understand that liquidity provision is a service. Okay, so to me, there's this mythical idea that when a trade takes place, the buyer and seller have this kumbaya, let's hold hands moment and exchange.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the end, it's incredibly small relative to the markets to begin with. Second of all, the person doing that, the HFT that takes out the penny up offer, That's some price improvement for that guy. So he's a happy guy”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So There could be that could be an issue. I don't think that it is because in the old days it would have been a 25 or 50 cent charge, not a nickel, much bigger. So you're talking.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay. First of all, let's start with the zero sum game problem. The capital markets are not zero sum. The capital markets can create wealth, and wealth can be destroyed in them. So I have a good friend what's a thousand shares of Apple for each of his kids in 1986. He sold it in 2010. He made 25, 30 times as money, wealth creation. Anyone who's bought an Apple product knows Apple stock has gone to the moon. So that's not zero sum.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it was Vanguard in 2010 said our portfolios due to electronic trading have a 1% per annum increase in return given the fact that their pension problems across our whole country, anyone that's involved with a retirement program or has pension money working in the marketplace is a beneficiary of more efficient market.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, one of my favorite examples is your telephone. Back in the day, we had telephone operators pulling cables and plugging them into the wall to connect you to your call. And today we have cell phones that are mini computers and you can do everything on your phone. Incredible technology advancement, efficiency. Haven't heard in the early days of cell phones, there were connection issues, but those have gotten so much better. It's all about how many megabytes of upload and download and so forth. I believe the same thing's happened for trading. So spreads have gotten tighter, commissions have come down dramatically. The cost of execution has never been lower.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“What's your best market? We have a dozen providers that are all responding. We can also include institutional passive liquidity providers. And we build a book. And once we have the book, we take the instructions from our client to execute the order against the book. So we create competition for every order. And in this pause, we're in position to take speed out of the equation.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“But in that time, we do something very constructive for the order. What we do is we ping our liquidity providers with only the symbol and effectively bring back the question that used to be asked at the post of what is the market”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I believe they're one of the biggest traders they did merge with Knight. Went from the liquidity providing side, which we were doing at get go, when I saw the PDQ opportunity. So, the way PDQ works, an order comes to us and we pause it for up to twenty milliseconds.”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, PDQ Enterprises is the parent of PDQ ATS. Broker dealer, we are probably considered a dark pool, even though we believe we operate differently than all the others. We have a unique market structure. We can actually create liquidity on demand for orders. We can consolidate fragmented liquidity. And the beauty of our auction process, which is kind of the key aspect of why we are different, is that we can aggregate people with different time latency sensitivity. So whether you're high schoolers who”
2016-04-08 · Masters in Business · Interview With Keith Ross: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source