Here's your +1 to get you out of gray area, but WRT "Wrt. unfair advantage" you should really read up on HFT in detail. All of HFT is based on the premise of getting an access to the order flow a split second sooner than everyone else. To get such access HFT firms pay very hefty fee to Nasdaq and other exchanges. That's where the unfair advantage is - not in the use of computers, but in an exclusive access to the information that not even all banks can afford.
everyone can purchase fast access. If a brokerage or a bank wanted to do it, they certainly could. It's like saying that Kinko's has an unfair advantage at making copies because it bought expensive copiers and regular folks have not.
And why do you think reducing frequency of all trades to 1 second would eliminate HFT ? the term high frequency would simply mean 1 second. But what it would do is drastically reduce liquidity in the market place, which would hurt small investors and not the HFT.
yes because spreads were wider and stock trading was routed to specialists on NYSE who could "jump the queue" and peek ahead at who they wanted or did not want to trade with. Also stock commissions were a lot higher in those days. Also, it was unfair because to have "fast access" required presence on the exchange floor which is much harder than putting a computer in the colocation facility
I'd say it's more like Kinko's discovering you want to make some copies...and quickly erecting a store right outside your house so you stop there instead of Staples.
I think you still got it wrong. It is more like Kinkos discovering you need to make some copies and then buying up ALL the paper and ink at staples, and then setting up shop right outside your house, with a higher price :).
I don't see anything wrong with this, it simply forces the market (theoretically) to hold on to valuable securities longer, which in theory would make it impossible for HFT firms to do this. In practice, everything is irrational, but it sure beats the pants off overregulation.
Yes, because that key word...discovering...implies that our rhetorical Kinko's has somehow gleaned advance knowledge that you're about to leave home to purchase some copies.
I don't think HFT in general is ruining things. I think the ability of HFT firms to quickly enter orders and quickly widthdraw those same orders millions of times a minute enables them to gain some insight into the trading market that the market was never designed for. And I believe that is a perversion of the original open-call trading that the stock market was built upon. All buyers should be able to see the ask at the exact same time.
A better solution would be to reduce the granularity of trades to, for example, 1 second. Nobody needs to trade faster than that. If all trades are executed in a random order every 1 second rather than the current 'fastest fingers first' nothing would really change much in the world, just the HFTs would go away. HFT is a leech on the face of the financial world.
