In the Feb 2012 issue of “Advanced Trading” magazine , I found these points worth noting down :

  • 2011 was an extremely bad year for hedge funds, with Asia seeing the maximum number of fund closures. Hedge fund managers have quoted random volatility as a major reason for leaving business.

  • The top performer in 2012 will be Commodity managers who have inside information about an underlying commodity — it is legal for them to utilize that, as opposed to equities, in which insider information is illegal.The managers who have fabulous networks and a really good understanding of supply and demand chains within the commodity space actually have a real advantage — more so than their equity counterparts.

  • 233,000 jobs were cut in US Financial services firms in 2011.Massive round of layoffs expected in early 2012.

  • There is a demand for quants in places like Facebook, Twitter, etc and there has been a sign that new graduates are preferring them over Hedge funds, Banks and trading desks.

  • A prediction about India - “They have very high inflation, very high food and energy costs, a growing middle class, and they will be there for the next five to 10 years.Their economies are going to grow through this crisis, and that’s one of the attractive things about these regions”

  • Using a standard like FIX as a smaller firm in an emerging market gives you the ability to punch above your weight and compete on equal terms with larger firms.

  • Start-up hedge funds and prop shops must get their market data strategies in order before they open shop and print their business cards and prospectuses. In terms of strategy implementation, it’s absolutely important. It’s one thing if you go into the lab, develop a strategy and paper trade it for a while But once a hedge fund manager moves from research to production,the market data has to be meticulously developed and monitored.

  • The demands of managing an internal market data distribution platform feeding traders’ desktops pale in comparison to those of managing global, low-latency market data feeds, colocation and proximity connection.

  • The market today is an increasingly strange and foreboding place. It seems to limp along all day till the closing, at which time the traders finally wake up and trade like Rip Van Winkle coming to from a six-hour nap. Increasingly, more and more volume is transacted on the close. In fact, 10 to 12 percent of the S&P 500 and 18 to 20 percent of the Russell 2000 volume now trades in the last five minutes of the day. Why is as much as 20 percent of the volume transpiring in just 1.2 percent of the trading day?

  • Retail investing in U.S. equities simply is down — investors have pulled almost $500 billion out of U.S. equity mutual funds since January 2007.

  • HFT firms go flat each day and hence volumes spike towards the end.

  • Traders seem to be moving away from the continuous market to an auction-type environment — driven by indices and closing prints.

  • One of the biggest stories of 2011 was the Pipeline Trading scandal, in which the operator of a leading dark pool paid a $1 million fine to the SEC for failing to disclose that buy-side customer orders were matched against proprietary flow while claiming that the crossing network matched customer order flow against natural liquidity from other customers.