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Comment by socialist_coder | Hacker News Reader

Do brokerages give all this info to the SEC so they can do this type of analysis and then be able to personally identify the buyers/sellers?

It seems wrong that my personal info is being given out by my brokerage, in a way that lets them identify my personal trades.

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Talked with an SEC guy at a conference one time, they have access to every order that touches any American exchange (filled or not) in a huge data warehouse, apparently most of this detection is just a series of SQL queries.

Inside trading of the information in that database would be something!

You can buy access to every trade being made (executed or not), but it won't have the information the SEC has like your name attached to it or if it was an opening or closing trade.

you can find this information online, trades (orders after they have been completed) are "public knowledge".

insiders are required to report their trades (search for "sec Edgar").

it is hard to make money knowing that a trade has taken place.. you need to know BEFORE and this is clearly illegal with very serious penalties (martha stewart served jail time...).

You're trading securities in the United States on a registered exchange through a registered broker, it is all heavily monitored and regulated, to assume there would be any sort of anonymity on a trade is delusional.

If you are trading on an SEC regulated exchange: https://www.sec.gov/fast-answers/divisionsmarketregmrexchang..., then yes the SEC can see everything.

Most trades through a brokerage don't make it on an exchange. They're internalized by a wholesaler like Citadel Securities. Which is the reason for the question.

This is what CAT was built to address https://www.catnmsplan.com/

you send your order to your broker/dealer, they send it to their OMS, which sends it to Citadel, who sends it to their internalisation engine..

All of these messages, including order Identifiers to create the linkages are sent to FINRA.

So your broker sends order "123ABC" to Citadel, FINRA gets this and can trace your order back up and down the "stack" however they want.

Ah cool, are the internalized orders reported publicly anywhere or are they just sent to the SEC/FINRA?

They still have to report to tape. You can’t really hide exchange listed stock trades.

These types of orders are sent as "crosses" where "citadel" reports they are both the "buyer" and "seller".

As an example, according to the NYSE FIX Spec, this is 54 (Side) = 8 (Cross).

This is how they are able to "internalise", by crossing retail flow vs their house account.

CATNMS https://www.catnmsplan.com/ helps with this.

I haven’t touched compliance in a long time. I tho they have to report to tape, not as a cross. They always have to report due to Manning rules.

Also, the trades were done prior to CAT. I suspect it’s from Blue Sheets.

Well, prior to CAT they had OATS, which has been around for a very long time, but was only "top level" messages (not a deep trace into the stack).

If you combine crosses with OATS you can still get some of the data you are looking for, just not as cleanly as with CAT.

What do you expect from SEC regulated markets/exchanges with AML/KYC and heavy regulation? Anonymity?

yes, they do, It is called "CAT" https://www.catnmsplan.com/

Broker/dealers send order data to the regulators daily.

It isnt 'wrong', you agreed to this when you opened your account,and the broker/dealers are REQUIRED to provide this as it is a "market rule".

EDIT : replace "trade" with "order"...

It’s required by law. The SEC and their counterparts have access to pretty all information on trades within their remit as gamekeepers. You broker will have told you this in your client agreement and their privacy statement.

>It seems wrong that my personal info is being given out by my brokerage, in a way that lets them identify my personal trades.

Unlikely.

More likely is that the brokerages and/or exchanges submit transactional order-book trade data to the SEC (i.e. anonymous numbers .... timestamps, quantity traded, direction).

If the SEC then spot something, its just a case of picking up the phone to the brokerage and asking to ID the client for the transaction at a given timestamp.

Not exactly.

Most exchanges require the client details to be sent to them (encrypted) so the regulators can see who is behind the orders on a real-time basis.

Canada for example is behind the times here, but has a program to address this : https://www.iiroc.ca/members/client-identifiers

If you are a corporation, you are required to provide your "Legal Entity Identifier (LEI)"

If you are a retail client, your account number is sent.

In some jurisdictions (like UK & EU) the regulator automatically receives at least the name, birthday and national ID of each client concerned with a trade and the IDs of the traders involved. If they want more details they just need to ask.

The IRS gets information from your brokerage on your trades with the proceeds and cost basis for each.

Sometimes privacy has costs, so do the cost-benefit analysis. What’s more important, your privacy from some investigator at the SEC who has access and abuses their position, or the SEC’s ability to detect insider trading?

Might be a regulation that brokerages have to comply with? Seems like a reasonable solution if such regulation was made in order to detect insider trading.

Indeed it is : https://www.catnmsplan.com/

The trading information is essentially public.

It’s just a matter of finding suspicious trades to start an investigation.

Trading information is public (quotes and trades) but the originating person/entity is not, so it would be hard to detect this via the public trade log or quote book since you couldnt see track records or profitability.

That said, the SEC does have access to the full dataset including the person/entity making the trades.

SEC/FINRA only gets access to blue sheet data. They don’t have direct “real time” access to all trading data.

This is why their data analytical skills are so impressive.

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