For the most part, I think HFT is innocuous.
For the most part, HN does not think HFT is innocuous.
All I'm suggesting here is, if an Excel plug-in talking to Globex from London is "HFT", that shoots a hole in one of the primary arguments used against HFT here.
Really, what we're running up against here is the silliness of the term "HFT". By the definition we're contemplating here, virtually every ATS in the world is an HFT.
Which one specifically? That the big players have an unfair advantage over the little guy?
> Really, what we're running up against here is the silliness of the term "HFT". By the definition we're contemplating here, virtually every ATS in the world is an HFT.
Not really, if it doesn't deal with market micro-structure, it probably isn't HFT. There are lots of ATSes that do routine things like rebalancing portfolios, or more sophisticated things like automated hedging of human traders, that is still happening at a human pace.
I haven't seen a detailed article yet that covers how many order modifications he made, and how far outside the money his spoof orders were (really far and it is something he could have managed by hand and I wouldn't call it HFT, pennies-close and his London Excel setup couldn't have handled it, but I think there is definitely a big HFT Goldilocks zone in there).
Look, spoofing is already illegal, and is already a problem in manual trading. Whether the guy did HFT spoofing or not isn't really damning to HFT at all. It really just shifts attention away from how fast all the illusionary HFT liquidity (tightening spreads and providing valuable liquidity is how pro-HFT arguments normally counter anti-HFT arguments about it a zero-sum game) evaporated during the flash crash.
My original comment can shed some light on that. Part of the regulators' approach, post flash-crash, to getting more liquidity in events like that was to add more stringent quoting obligations on market makers. The regulation was already ineffective and poorly thought out, but to get an idea of how much the industry really values liquidity don't look at the bullshit they sell in congressional hearings (we pay the market in liquidity!), but instead look at the product they demand as customers of Nasdaq (a new, explicitly anti-liquidity order type).
(edit: ok a bit overblown on that last part, I don't think the flash-crash was that big of a deal. The HFT industry just really oversells liquidity and it is kind of a farce, the market literally shuts down for two days each week and takes ten days of holiday each year.. literally a near universal zero liquidity for 30% of the year or more if you consider market hours)
I think we might be a bit biased on this site because a lot of the HFT recruiting targeted at techies in other industries is going to be in cutting-edge areas of ultra-low-latency or generically-dealing-with-massive-data where experience in a different industry can directly cross over.