Comments on: The HFT debate A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: kiers Sun, 06 Apr 2014 08:14:47 +0000 The problem with HFT WHICH everyone is overlooking:
HFT inovolves a lot of CIRCULAR TRADING in between the moments when “real orders” show up, which literally creates/sustains a fake price point. I am NOT convinced of the soundness of price signals in presence of HFT pay for volume games which is a sophist term for circular trading. Entire HFT strategies: Stat Arb, market making etc are irrelevant to absolute price discovery/

They are literally printing the tape like QE prints money in lieu of US Treasuries not having to be repaid on maturity by US govt b/c the fed is returning the principal at maturity back to US gov.

People are bamboozled.

By: neilcrammond Thu, 03 Apr 2014 10:11:50 +0000 exchanges are the guilty parties and they were very aware what they were creating .
Perhaps their remit of providing “fair and orderly markets ” needs to be taken away and their regulation and governance replaced as currently they are the abuse .

By: DanielRight Thu, 03 Apr 2014 09:09:44 +0000 NOT JUST FOR THE BIG GUYS:
Following 60 Minutes this Sunday-Stock market with Michael Lewis –
This is Not just for the big guys:
I Know First algorithmic trading system is open to the average investors,
it is not HFT but beat the S&P500 in the last year with +51% average gain.

By: Robertla Thu, 03 Apr 2014 08:21:47 +0000 @mfw13…… great idea.

but, take it one step further…….

who gets to profit from the tax?

if the government gets revenue, aren’t they going to try and increase the volume of HF trading?

……we still may not have something that provides a useful function to society.

By: edgyinchina Thu, 03 Apr 2014 03:15:36 +0000 So… It sounds as if Felix is condoning bad behavior, and potentially illegal activities in financial markets! ‘If you want to fix things’…. Felix: I want to do more than ‘fix things’… I want things to be transparent. I want things to be open for everyone to see. AND, I want people who break the law to go to jail – do not pass go, and DO NOT collect those extra fees for shenanigans which cause the markets to be ‘rigged’ in favor of people with fast computers.

By: y2kurtus Thu, 03 Apr 2014 02:08:10 +0000 @ Felix … this is one of your best post ever. Thanks for this!

I think MFW13’s first sentence is the most important point. What is the social good provided by HFT? Yes they are spending a large percentage of their on cutting edge IT equipment but INTEL isn’t going to stop R&D if these guys go away.

I don’t buy that their social utility is making a market because I don’t see them doing that… if I see bids and asks and I attempt to hit one that’s the market I want to be in… if bids and asks can get submitted or canceled after mine and get executed ahead of mine then how did they offer me liquidity? I placed an order without their liquidity to begin with… I already had a counter-party (or did I.)

The issue of HFT is probably overblown… but if the public’s confidence in the markets goes up marginally by mostly eliminating HFT then the exercise is worth while.

By: TFF Thu, 03 Apr 2014 00:27:34 +0000 mfw13 put it best.

By: Timbuk3 Wed, 02 Apr 2014 22:55:50 +0000 @ MFW13, where is the “Like” button to commend / like and agree with your comment?

@reuters, your log in utility thinks i want to log in to edit your blog or something…. Offers me a second server log in user interface after i log in to place a comment. Looks like you have your own security issue happening starting yesterday(?).

By: Auros Wed, 02 Apr 2014 22:19:57 +0000 I’d take MFW13’s suggestion, though I might do a percentage-based tax rather than an absolute number of cents. (Or both. Say, 1 cent for each trade, plus 1 bp on the total volume of trades, payable with your regular annual taxes.)

And, as QCIC says, requiring trading pools to operate as a series of relatively simple auctions, held with a minimum period between batches of trades, could also help. Certainly it eliminates a lot of the advantages people derive from advantageous physical access or superfast hardware.

By: Timbuk3 Wed, 02 Apr 2014 21:41:19 +0000 How Ironic.

Wall street loves it when corporations reduce costs through outsourcing and automation, but now describe themselves as “that most endangered of species, the NYSE floor trader” when they themselves are threatened with job loss and extinction.

Now you understand “Main Street” a little better, when you have given up control of your life savings and retirement funds to manipulators who are constantly finding ways to separate you from your hard earned money, and happy to throw you to the curb at the first opportunity to save a buck.