Haim Bodek on Exposing The Cheats on Wall Street
Haim Bodek is usually referred to as ‘The Algo Arms Dealer”, and it’s easy to see why. He started his career in Hull Trading, a firm that is well known for its innovation in automated trading. He then went on to take prestigious roles at Goldman Sachs and UBS.
In 2007, Haim founded the high frequency trading company Trading Machines. During its peak, the company traded 0.5% of options trading volume with the help of 25 team members.
However, two years later, the company had issues and lost a lot of money. Haim discovered later on that the root cause were secretive order types that a few firms used, which gave them an unfair advantage to front-run the orders of other participants.
After this discovery, he approached the SEC about his concern. He didn’t know it at the time, but this was the beginning of one of most complex investigations to dade made by the SEC. Of course, he goes into detail about this during the interview.
Haim also discusses about Payment for Order Flows, as in what actually happens to orders after traders click the buy or sell button.
What’s Covered in This Interview:
- Why Hiam went out on his own to chase the low-latency game in options and equity markets.
- Why Hiam decided to talk about issues such as queue-jumping and other loopholes, which turned into a 4 year investigation with the SEC.
- How Hiam’s company Trading Machines was severely disadvantaged.
- Hiam discusses whether or not HFT really affects retail traders.
- Why Hiam believes a lot of HFT firms cheat.
- The “funny business” of Payment for Order Flow.
- Why brokers isn’t really helping you by maximizing kickbacks from off-exchange market makers.
Links and Resources:
- The Problem of HFT – Haim’s first book which goes in high frequency trading and and stock market structure reform.
- The Market Structure Crisis – Haim’s most recent book. In it, it talks about topics such as dark pools and electronic stock markets.
- Dark Pools – This book by Scott Paterson should be on your bookshelf if you want to find out more about Hiam’s biography..
- The Wall Street Code – A documentary by VPRO which explores the complexity and market impact of HFT.
- HaimBodek.com – Hiam’s personal website. You can also check out his other website Decimus Capital Markets via this link.
- @HaimBodek – Follow Haim on Twitter.
