Comment Text:
First off, after reading the comments before me on specualtors and holding limits, the trading community and the CFTC in whole realize how little the public knows about markets, their structure and their integrity (or lack thereof).
The issue is not of speculators in general, the issue is of the illegal practices of HIGH FREQUENCY TRADING. This encompasses front running, fake bids and offers (market layering), spoofing (using co-located supercomputers to ping the markets for orders) and paying up for data feeds not available to most market participants. These computers are prevelant within our commodities markets, they are deriving prices from proven manipulative practices that in turn add burden to companies, consumers and the overall economy.
The intent of these High Freq Trader's is to obviously make money like all participants but they are not buying and holding for a particular period such as trader or hedger but the HFT's thrive off rebates dispersed by the exchanges to provide "liquidity". Why should the exchange ever have to give "kickbacks" or rebates? It seems as though they are paying the HFT's to practive these tactics, therefore the exchanges and HFT's are a team. They help each other extract capital from markets by the manipulation of prices.
I am just one of thousands of traders and money managers that see this go on daily, I have even gathered video evidence that can be produced within the COMEX and NYMEX complexes.
Please ask around trading desks if imposing restrictions on HFT would improve volatility and efficiency of the markets. That reminds me of the ability of HFT to produce fake momentum by trading with others or somehow with itself to produce "action" and lure in other orders at certain prices.
This increases unneeded volatility in turn increasing the margin requirments for traders wanting to hold positions overnight. Look at charts before 2005 versus charts post 2005. An obvious without question increase in market volatility due to the HFT programs sponsered by the exchanges.
Please look to discuss several important issues about fixing our market structure.
1. Implement a fee for order cancelations above a certain threshold; this should narrow the profit margin of firms continuing to push and pull fake bids or offers.
2. Do not allow Co-location of servers within the exchanges or selling data feeds to firms; this is selling a distinct advantage to a select few while leaving the playing field very uneven for price discovery.
3. Create holding time for positions, it doesnt have to be long but more than one second and less than 5 or 6. This should eliminate unproductive noise and rebate churning by the HFT.
4. Eliminate the use of Flash Orders, these orders undermine the integrity of every order in the market.
5. Disconnect the commodity ETF's with commodity futures markets, ask UNG holders if they have been happy with the rollover.
The market is so fragile right now with HFT running wild, real traders and real orders are scared to be placed and be active. If you address these issues with solid discipline your market will flourish as it did in the first several months of electronic trading. It would bring the market back to total transparency, integrity and provide a safe and even field for hedgers, speculators and market makers.
Thank you for your attention and I pray these issues will be addressed and dealt with in an aggressive manner. The trading community will certainly stand behind you as you move forward in disabling the HFT network.
