Inspired by Renaissance Technologies - as described in Greg Zuckerman's book, "The Man Who Solved The Market: How Jim Simons Launched The Quant Revolution - Alphacution leverages the concept of "factor dimensionality" to make a significant enhancement to its ecosystem map framework.
Today - February 26, 2021 - at 12:13pm ET - in what appears to be a well-managed front run of press collaboration, the Wall Street Journal published "Robinhood in Talks to Settle Finra Probes Into Options-Trading Practices, Outages" based on a filing that says the company is also being examined by the SEC, states. Here are the key parts of that filing - and then some...
Alphacution provides numbers, pictures and rationale for "price improvement" - in the context of captive retail order flow - having an indelible function that is different than what you have been told by those who traffic in it...
Leveraging numbers and narrative, Alphacution builds a higher-dimension analysis of market structure mechanics on top of Bloomberg Opinion's Matt Levine's recent manifesto on payment for order flow (PFOF). Disclaimer: No unsolicited elbows were thrown during the creation of this Feed post...
“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”Ayn Rand UPDATE (2/17/2021): The following exhibits and content have been updated to reflect an additional $12 million in order routing revenue for Tastyworks earned in Q4 2020; the data for which not being available prior to the initial publication of this Feed post. This brings Alphacution's estimate for total payments for order flow in 2020 to $2.755 billion. Additional modeling for the 13th and smallest retail broker in our sample - Dough, LLC - reflecting $0.1 million in order routing revenue for 2020 is not included in the figures or analysis below. Presented, for now, without comment - except for: Alphacution identified and modeled 12 retailer brokers and 10 wholesale brokers for this analysisCitadel Securities paid more than $1.1 billion for retail order flow in 2020, representing 41.7% of total payments; largest by almost 2x of the second place wholesaler (the sum of SIG affiliates, G1 Execution Services and [...]
This is the fuel that ignites the chaos. Without it, the New Market Kamikazes run into the friction that keeps the rubber on the road...
"What's really happening here is that instead of people becoming engaged in finance when they're 40, 50, 60 or whatever, they're finally starting to learn that - hey - this is really cool. And so, we have an entire generation now which is not only going to support capitalism, it's going to accelerate the growth in free markets and [provide] massive amounts of liquidity so that everybody out there is going to benefit. This is the best thing to happen to the global economy in three or four decades. Getting millennials engaged in finance is transformational."Tom Sosnoff, co-founder, Tastytrade; on CNBC Squawk Box, January 29, 2021 in response to a question about the "democratization of finance" and the status of capitalism With all the craziness this week around GameStop, Robinhood and the whole STONKS meme, an event from last week is at risk of being swept under the rug. So, I wanted to add this one to the Feed as a marker before we lose the thread entirely. Here's the [...]
"But how do we know when irrational exuberance has unduly escalated asset values?"Alan Greenspan By now, everyone - and I mean, EVERYONE - knows about how "GameStop (GME), [the] hedge funds’ most-hated stock, was targeted by an army of retail investors who marshaled forces against short sellers in online chat rooms. In the Reddit forum “wallstreetbets” with more than 2 million subscribers, rookie investors encouraged each other to pile into GameStop’s shares and call options, creating massive short squeezes in the stock," according to a synopsis of the saga by CNBC. In short - so we're all on the exact same page - there's been an epic short squeeze off the back of a classic pump-and-dump scheme. Period. But, what makes this particular short squeeze notable in the history of all short squeezes is that it was fueled - and ultimately, turbocharged - by leveraging social media tools, like Reddit and the Robinhood trading app - among other trading platforms like Interactive Brokers (IBKR) and Webull - and has been [...]
“You wanna know which ring is my favorite? The next one.”Tom Brady The detailed exhibit presented at the bottom of this Feed post is 1) featured in our just-published case study, "The Rise of Hudson River Trading," 2) an expanded version of an already somewhat outdated exhibit originally published in our "History of Jane Street" case study (below), and 3) only an excerpt of a much larger global map of entities that Alphacution has been developing to be featured in upcoming research, culminating in a comprehensive case study on the global proprietary trading community later this year... (Fingers crossed.) For now, I want to emphasize that this is not a ranking by anything other than founding year, and therefore, is simply designated as "25 Leading Prop Firms." Otherwise, it would have been more accurately - and provocatively - named, "Top 25 Prop Firms." Yes, the largest - and most dominant - players are in here. But, this list is also a bit US-centric, does not include any APAC players or [...]
"In playing ball, and in life, a person occasionally gets the opportunity to do something great. When that time comes, only two things matter: being prepared to seize the moment and having the courage to take your best swing."Hank Aaron ** The executive summary for Alphacution case study, "The Rise of Hudson River Trading," is also available for free download (with registration) in our Reports Library ** Introduction As if on cue, and apropos of the times, a tweet by Joe Gawronski, President of Rosenblatt Securities states that December 24, 2020 marked the first time ever that off-exchange trading represented the majority of US equity volume (50.38%): Rewinding from there to a Reuters article dated January 16, 2018 entitled “Hudson River Trading to buy rival HFT firm Sun Trading,” HRT’s co-founder and director, Jason Carroll, said in a statement, “This acquisition combines HRT’s expertise in on-exchange trading with Sun’s expertise in off-exchange trading creating a stronger, more diverse firm.” What happens between these two points in time is no accident. [...]
