Re:A High Frequency Trader's Apology, Pt 2
by boxy_brown on Thursday April 26, 2012 @03:25PM
(#3895679)
Your comment is conjecture, not evidence. It's an invalid conjecture, because it makes sweeping assumptions about some of the most complicated, chaotic properties of securities markets. And it's incorrect.
There are market centers that prohibit high frequency traders. Reg NMS requires any center that disseminates quotes to prohibit trading through the NBBO (best price at any point in time across all exchanges). So these market centers must be dark pools, not exchanges nor ECNs.
These centers represent a small and shrinking amount of trading volumes. Nonetheless, they exist.
Re:A High Frequency Trader's Apology, Pt 2
by sailfrog on Thursday April 26, 2012 @01:57PM
(#3895259)
I'm not sure reg NMS allows this. Registered exchanges publish protected quotes that other venues are not allowed to trade through.
Re:A High Frequency Trader's Apology, Pt 2
by boxy_brown on Thursday April 26, 2012 @03:01PM
(#3895583)
> I'm not sure reg NMS allows this.
This is correct. It would be extremely, unequivocally forbidden under Reg NMS to create a quote-disseminating market center with the proposed property.
Anyone can start a market. If HFTers were stealing pennies someone would have come along and started a market that banned HFTers (or changed the rules to otherwise get rid of them). Then all of the speculative investors would use this market instead since they could be assured that no one was siphoning off pennies on every trade. Eventually markets with HFTers would shut down due to a lack of customers.
The fact that this hasn't happened has to be considered evidence that the HFTers are, in fact, providing value to speculative investors not the other way around.