On Mar 26, 2012, at 9:32 AM, valdis.kletni...@vt.edu wrote: > On Mon, 26 Mar 2012 08:59:34 -0400, Rodrick Brown said: >> HIgh frequency trading does provide a service to the financial markets as a >> whole despite what the media and government politicians will have you think. > > OK, I'll bite. What benefit does the market *as a whole* get from the ability > to do trades in 60ms rather than 120ms? (Hint - the fact you can extract > money via more arbitrage transactions per minute is a benefit to the trader, > not the market as a whole - if you extract $100M from the market, it came > from somewhere....)
In its core very liquid markets and market efficiency. The faster a trade executes is the faster the market can recover and self correct themselves from trading mishaps. Faster speeds has provided higher volume of shares traded which has directly lead to higher profits, higher tax income for governments, and the less likely-hood of being front-run by dishonest brokers and most of all lower transaction cost for the average market precipitant. HFT like anything else in the modern world is prime for abuse for anyone looking to manipulate the markets by taking advantage of certain rules or loopholes that legislation has not yet discovered or plugged. That being said I strongly believe high speed trading has done more good than bad for the financial markets as a whole. Lowering access time to the markets will only open up a new can of worms which will easily be circumvented by other loopholes and abused by those with the know how! Sorry for the off topic rant!
