G'day Team
1. Recent trading in Caspin shares looks strange
Check out the images below – the first one a Time Series taken from iRess on 1 Feb 2023 re Caspin. This illustrates the recent problem that seems to have started on ~ 20 January and has continued for the 8 trading days since then. There's been a very large number of trivial transactions - often ~100 shares at a time - (bots being deployed), while total value remains broadly similar.
I basically went back 2 months - until 1 December 2022 for a recent comparison period, and broke the 41 days back to then down into four 8 day brackets and one 9 day bracket, then compared the number of transactions, value etc.for each bracket. Here goes ...
I started with this "iress Time Series"
I can't comment about the validity of the recent trading that it shows especially in the last 8 days but this sort of high frequency-trivial value trading would incur crippling transaction costs if carried out by most of the population using their online facilities.Even if it is above board, it seems to be an opportunity available to a select few only, and that's not a good start.
2. Does anyone in authority care about market integrity perceptions?
The above occurs in what is stated sometimes that is meant to be a level playing field. Righto.
The fact that it happens with numerous stocks makes the matter worse. It raises questions about market integrity and creates a widespread feeling that market manipulation may be happening and that even if it's not, the market is unbalanced, operates unfairly, and no-one in authority seems to care.
Since the market is the main source of funding to many businesses, that has to be a significant structural/policy FAIL.
If however those in authority think the current position is fair and reasonable then they've got a huge messaging job to give to the investors – and those who are trying to manage investor relations within our companies. I see this as a debilitating problem for our stock exchanges.
3. Bots are just tools used (or abused) by humans – in an unbalanced system
I hear a lot about bots doing this and that, as if they were naughty children. That trivialises the problem. I want to dispel any thought that bots make trading decisions but they can't be controlled, so therefore they can be used as tools to break the law. That's not true, even though supervision of bot trades seems to be almost non-existent, unfortunately.
The fact is that Buy-Sell actions are the applied result of programming actions by humans, who are accountable for the outcome. A bot doesn't break the law – it's simply the tool which is being conveniently applied by someone. It's another example of the BS such as "the computer caused the flash crash - not than the negligence of the programmer or operator etc".
Here's an analogy: You can't programme an excavator to demolish a jewellery shop and to load all the contents into your waiting truck, and then say that the excavator did it…. (I'm sure there are better analogies but that one will do after a couple of glasses of wine).
Long story short: the human is still responsible. Don't break the law! Someone will get nailed one day. BTW, that's the responsibility of ASIC as I understand it - not the companies whose shares are affected.
4. Corporations Act – Illegal to create/maintain an artificial price ("market manipulation")
This is not legal advice but I think it's relevant:
5. What's happening (recently) with Caspin?
I don't know whether someone is accumulating Caspin shares or preparing to do so, or is distributing what they want to sell. All I've got is what was in the market today. I understand how thoughts arise of "market manipulation" and if it's not that it certainly damages perceptions of market integrity IMO.
To illustrate the ridiculous trading that has been occurring, here are screen shots of all trades yesterday. There were:
* 110 trades totalling 48, 925 shares including:
* 8 transactions totalling 38,653 that seemed unremarkable
* the remaining 103 transactions totalled only 10,272 shares – an average of 99.7 shares per transaction!
More than once, unfortunately, when I was making multiple trades on a heavy buying or selling day (e.g. if building or reducing a large position in an illiquid stock such as Caspin - OK, I've only ever bought Caspin, I have sometimes been held back by my online broker even though every trade was at least in the low thousands of shares, and completely genuine. The inconsistency of treatment is galling - excess conservatism by some brokers and others, well ...
Here's my summary of the trading that I've analysed today in Caspin, looking back for 2 months to 1 December 2022, in brackets of 8 or 9 days.
Look at the figures in red; huge increase in transactions - averaged over the latest 8 days - while at the same time the size of each transaction (on average during those 8 days) has slumped, together with the average value of each transaction. That has happened because of ridiculous bot transactions like those shown above, just for yesterday (basically the ones that I have NOT highlighted in green).
Yesterday was typical of the last 8 days - a few apparently normal transactions, swamped by bot activity,
FWIW, here's the spreadsheet that I created, to derive that summary. It was based off the iress Time Series data at the top of this post, to which I added a couple more columns.
6. Background environment
This is a time to mention that transparency of important broker ID details for Buy and Sell orders was intentionally removed from public view (it had been available to those who used brokers) some years back. That was done against a BS background as follows. Brokers had access to data which identified which broking house was behind each order. That was said to be unfair, because those not using brokers did not have access to that information. So it became hidden from everyone!
Unsurprisingly to any thinker, the resulting intended opaqueness has not been good for transparency and scrutiny e.g. of trading such as now.
Rather than enabling access to all traders (not just those using brokers), the broker identification for each order was hidden after that. By hiding the data, the ASX took a dangerous step backwards IMO - away from transparency, when they should have gone forwards. Sadly, that outcome was an ideal situation for some market 'players' to operate in disturbing ways. I cannot see that to be in the interests of society as a whole.
(20min delay)