Doug gives the Themis Boys some props, and he does the same to BATS.

Guest Post: The Story of Canada Bill Jones by Doug Clark of BMO

The Story of Canada Bill Jones by Doug Clark of BMO

Growing up my father used to tell me many a long tale of odd characters either from history or his own past. The old man had a way of telling the stories – employing funny voices, and giving vivid descriptions of events – that made them both entertaining and memorable. I have recently found myself retelling some of the stories to my own boys. In fact just last night I was regaling Matthew and Nicholas with the tale of Canada Bill Jones, when it struck me just how far ahead of his time he really was.

For those of you unfamiliar with Canada Bill Jones, he was an English born Canadian raised hustler. Not just any hustler, but perhaps the greatest hustler of all time. Bill perfected the art of ‘throwing’ (dealing Three Card Monte) in the Canadian west and – like so many talented Canadians (Alan Thicke, Celine Dion…) – he took his ‘talents’ south in search of riches. For those of you that have never come across a great thrower, the art is in seamless distraction and image projection. Bill perfected a look and patter that instantly assured any potential marks that he was both too nice and too stupid to possibly be hustling. His favourite feeding grounds were the Omaha to Kansas City trains, posing as a bored yokel looking to liven up the ride by betting on cards. Even after losing all their money, most marks were said to be too baffled to understand how they lost, and too confident they were miles smarter that Canada Bill to believe anything was amiss. Throughout the mid to late 19th century Bill would make millions off of unsuspecting rubes…big money today, unheard of money in the 1850’s.

It strikes me that if were Bill alive today his talents would be of great use to some of the market places operating globally. They too excel at distraction and image projection. Always claiming to have our best interests at heart, and when the likes of Sal and Joe object to some of their practices they claim with wide eyes and dumbstruck grins to be surprised. (“What, putting unique order numbers on the public feed is bad for investors? But we were all just trying to help out.”) Most recently I discovered that one global ATS – Chi-X – is still displaying internal order numbers on their public feed for new and refreshed trades, even after they went to great length to announce they had taken such order numbers off of any trades. (For those techies in the crowd Chi-X changed the CHIXMD feed – version 3.2 – such that tag 9 is always “0” for any trade, BUT they still populate tag 9 with an internal unique order number for all orders and refreshes – including pegged orders. So when your reserve (iceberg) bid is hit at $10.00 the refresh order is broadcast with the identical ‘unique’ identifier making it obvious to one and all that this is a reserve order…let the gaming begin). When I asked Chi-X if the protocol document I was reviewing was correct senior management replied that they were “curious to know” how somebody would trade off this information. Given the input these ATSs and Exchanges receive from some of the brightest members of our community, I am dumbstruck that such a venue could be unaware of the impact such information leakage would have.

This rube has – thanks largely to Sal and Joe – wised up. It is time the distraction game is put to an end. We need to set global standards for what can, and cannot be included on public data feeds – or failing that set disclosure standards to ensure we all know what is being disseminated. I have tried to reproduce Sal and Joe’s efforts in examining the data protocols of the biggest markets, and found it far too difficult to attain the official documents. (Although I will give full props to the group at BATS, who not only publish their spec in an easy to find area of their website, but also have a full section devoted to explaining how they prevent information leakage…including “When the displayed portion of the reserve order is refreshed, the order is assigned a new OrderID on the XXX feed.”….nice to see somebody is doing it right.

While Canada Bill was a great hustler, he is reputed to have been a terrible and insatiable gambler. As the story goes Bill’s longtime partner, George Devol, stumbled across Bill losing his shirt in a clearly rigged poker game. George tried to convince Bill to quit the game, arguing he couldn’t possible win. Bill famously retorted “I know it’s crooked, but it’s the only game in town”. I called my dad last night to tell him I finally knew exactly how Canada Bill felt.

Sal Arnuk
Themis Trading LLC
10 Town Square, Suite 100
Chatham, NJ 07928
973-665-9600
AIM : SalTheBroker
www.ThemisTrading.com

Category: Think Tank, Trading

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