Former Sell-Side Trader Blows Whistle on NYSE Order Routing Scheme; SEC Says Nothing..So Far

As recently reported by Automatedtrader.com, with below excerpt from Sept 21 New York Post, this is not the first we’ve heard about Wall Street whistle-blower Haim Bodek; its an update to claims of conflict he brought to the SEC and other regulators last year in connection with NYSE’s electronic order handling procedures that favor high-frequency trading (HFT) strategies wrapped within the NYSE payment-for-order flow schemes. Until now, Bodek’s allegations have gone unanswered, so he is apparently increasing the volume.

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Haim Bodek

Now managing principal of Decimus Capital Markets, Bodek is a former Goldman Sachs and UBS trader-turned-high-profile-mole last week launched a fusillade at the already battered New York Stock Exchange, saying the exchange’s latest gamble on high-speed reforms should be stopped.

Bodek last went this ballistic back in 2011, when he went directly to the Securities and Exchange Commission to accuse exchanges of giving turbo-charged electronic traders an unfair edge over the little guy.

Bodek, 43, of Stamford, Conn., had run a high-speed-trading firm after his Goldman and UBS gigs. The SEC is said to be quietly probing his charges, but declined to comment.

“I am surprised the NYSE decided to take some of the most contentious order types in the US stock market to make a stand in trying to validate their legitimacy,” Bodek told The Post soon after he loudly complained about the NYSE’s reforms in a blistering letter to regulators last week.

Bodek contends that the NYSE reforms would disadvantage the regular investor because they’d hand the slickest of traders a way to beat the little guy to the best price and to pick up a controversial rebate — using lightning-fast stock-price feeds.

The order “types” he referred to are well known to trading pros from an earlier attack this summer by Bodek on intermarket sweep orders.

But Bodek’s letter last week to the SEC takes his case a step further, challenging the legality of the NYSE’s order-type reforms. The exchange previously vowed to jettison about a dozen order types to make trading more understandable, even as it attempts to modify others.

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