Re:Humidity in New Jersey impeding radio transmissions and s...
by munk-a on Wednesday July 04, 2018 @08:36PM
(#17460183)
With the current rules in place this isn't illegal, it would be if you coerced the information through some out-of-band system i.e. "Hey bob tell me what you're going to do five minutes before you do it and there's a nickle in it for you" but currently HFT front running is taking advantage of market arbitrage anomalies and trend prediction along with quick response to news events.
HFT adds nothing to the markets of value[1] and lowers the value average players are able to extract.
[1] except liquidity which they usually don't add in a useful manner, they will tend to make highly liquid stocks more liquid while not adding any liquidity to stocks that are being harmed by illiquidity.
Front running is accomplished by HFT, but not all HFT is front running. HFT is simply the ability to execute trades quickly on new information, like earnings reports, fed meeting notes, etc. HFT back in the 17th century would simply have been having the fastest couriers and horses to carry news, now it's having the fastest software and data connections. HFT has a couple beneficial sides too, as it tightens the bid/ask spread.
Basically don't confuse a technology that can be used for bad purposes, to be the problem, blame the brokers and the regulators that allow it to happen.