The NYSE has announced it is (arbitrarily) backtracking on its requirement to release program trading data (program trades are trades run primarily by the big banks and their quant funds).
The New York Stock Exchange LLC (“NYSE”) will be decommissioning the requirement to report program trading activity via the Daily Program Trading Report (“DPTR”), which was previously approved by the Securities and Exchange Commission (the “Commission”).1 The last trade date for which member organizations will be required to file the DPTR with the Exchange will be July 10, 2009 and therefore the last required date to submit the DPTR will be July 14, 2009.
In the 2007 rule filing, the Exchange proposed to eliminate DPTR. The 2007 filing noted that there was some duplication between the DPTR data and the audit trail information that member organizations provide to the Exchange via account-type indicators at the time that they submit program trades to the Exchange... [A]fter consulting with the SEC, the Exchange announced that it would delay implementation of the two redefined account type indicators, and pending such implementation, member organizations would be required to continue filing the DPTR with the Exchange. The current delayed implementation date of the redefined J and K account type indicators is June 30, 2009. Accordingly, the Exchange still requires member organizations to submit DPTR.
The Exchange has filed with the SEC to implement the decommissioning of the DPTRrequirement following the July 10, 2009 trade date. Accordingly, the last required submission of the DPTR will be on July 14, 2009, which is the second business day after the last trade date for which the DPTR is required.
In addition, in connection with the decommissioning of the DPTR, the Exchange will not be implementing the proposed redefined program trading account type indicators (J and K) and will continue to use the existing J and K audit trail account types. Upon further analysis and based on industry input, the Exchange has determined that these redefined account type indicators do not enhance the regulatory audit trail because the proposed redefined J and K could subsume some of the other, more granular account type indicators that the Exchange currently receives. Accordingly, the Exchange has determined not to redefine the J and K account types in the manner previously proposed, and is instead leaving the J and K account-type definitions unchanged.
The Exchange further notes that it will use the existing account type indicator data – which captures program trade information for those orders sent to and executed on the Exchange – to report to the Commission on a weekly basis the program trading statistics for portions of program trades executed on the Exchange. Accordingly, beginning on July 23, 2009, the Exchange will provide the Commission with its weekly statistics on program trading based on account type indicator data rather than DPTR data. Similarly, at the same time, the weekly statistics regarding program trades that the Exchange provides to media outlets will also be derived from account type indicator data rather than the DPTR.
The finblogs are abuzz. Tyler Durden at zero hedge has this to say:
Basically this is the beginning of the end of unmodified data transparency. Going forward the NYSE will provide whatever data it feels comfortable, after sufficient internal "audits," and media outlets such as Zero Hedge, which had presented its millions of readers the only data point about Goldman's complete encroachment of not only NYSE but Program Trading, will be henceforth unreliable and likely will present no useful information at all.
This is a travesty, as well as a complete obliteration and a mockery of the move for transparency that the Administration, Regulators and Exchanges have been posturing they support.
And moi naively thought brazen corruption happens only in turd world banana republix. Welcome to the brave new world.
Sad to see a great nation like the USA come crashing down like this. The US' strength was in its institutions and their probity. That reputation has taken a serious beating and will likely not recover in years. This credibility crisis has dented all the main fin institutions the victors of WWII devised to further their dominance.
A poster I respect a ton had this to say:
If you own shares of anything in the stock market other than Goldman Sachs or JPM (and possibly CITI), sell now! The quant boys no longer have to report their huge swing trades. They are free to run up the prices of these big banks under a cloak of complete darkness. When they are done and have cashed in on their stock gains, they will be free to short each other under that same cloud of darkness.
We saw what happened to the prices of these big bank stocks when they were able to get rid of mark-to-market accounting, so get ready for a re-run. The pump will be breathtaking, and the dump will kill what's left of the pensions and small investors. Welcome to the Obama-Summers-Geithner-Bernanke-Rubin definition of "transparency".
There is the old dog and cat analogy that explains how these banks have been able to pump up each other's net worths. Imagine that GS has a dog, and JPM has a cat. GS values its worthless mutt at $1 million. JPM values its worthless ally cat at $1 million. GS buys JPM's cat for a borrowed million dollars and takes a 10% commission. JPM buys GS's dog for a borrowed million dollars and takes a 10% commission. The dog and cat are now collateral for the worthless $2 million in loans. The Fed backstops the loans, the Treasury backstops the Fed and the American taxpayers backstop the Treasury. Guess who wins and guess who loses.
GS and JPM, without mark-to-market audits get to count all that backstopped worthless paper at face value. These phony assets and the pure profits they made trading them to each other and then to other banks, pension funds and investors enable them to pump up the values of the stock shares of their own insolvent banks. Now, cloaked under the total secrecy of non-reporting, their highly leveraged quant traders can force that value even higher. Once the banking barons have dumped these worthless shares at crazy prices, the damage to the market and the US economy will be cataclysmic.
On a separate note, more regulatory golmaal
You gotta love the way the Government keeps working for cronies. GE CEO, Jeff Immelt, was appointed to the President's Economic Recovery Advisory Board in 2/09. Now the FDIC, through a loophole, is insuring billions in GE debt. I guess Immelt advised the FDIC to do so. What will GE do with this risk free money it received for selling that debt? Why use it to buy distressed paper from its cronies. When the paper goes bust, the taxpayer will be on the hook.
Immelt was paid over $8 million last year, as he ran the company into the ground. Now, being a member of Obama's advisory board, I'm sure he will get paid even more. After all, they'll value that near worthless paper at face, and GE will look profitable after adding all those assets. They'll be no mark-to-market accounting to prove otherwise.