Today’s WSJ has a great page one story on how some day traders profited from being able to listen in on a Merrill Lynch squawk box, and then front-run institutional orders. My favorite quote is this one:
Traders used various strategies at [day-trader firm] Watley, but several say [firm executive John] Amore’s preferences were clear. One trader recalls Mr. Amore walking around the floor instructing employees to “trade only on what the boxes were saying” because anything else was “speculation” that “wouldn’t work.”
Yup, nothing works quite like being able to front-run orders. Those darn quants and hedge guys trying to create trading & arb strategies … yeesh, what a waste!