And you think it's morally wrong even if it leads to better functioning markets with lower costs and better prices for everyone else.
Also, what specific prohibition would you change in the law? And who do you think that would help?
Also, what specific prohibition would you change in the law? And who do you think that would help?
But it doesn't lead to any of these things. It leads to worse-functioning markets with worse prices for everyone else.
Where do you think the profits made by HFT come from? The air? Ghosts? Fairies?
For instance, consider a middle-man between a wholesaler and a retail consumer. The wholesaler sells widgets in lots of 1000 for $1 a widget, and individual widgets for $2. A middle-man steps in, buys the lots of 1000 widgets for $1 a widget, and sells direct to consumers for $1.50 a widget.
Consumers are getting a better price, and the middle-man derives a comfortable profit.
Here's the Vanguard CIO saying the same thing: http://www.cnbc.com/id/49434073
You realize that spreads used to be 12.5 cents or 25 cents and now they're generally 1 cent right?
You could probably get the same benefits by (a) forcing exchanges to allow something like a 10^-9 granularity of prices, (b) restricting matching engines to operate on something like a 15 minute heartbeat, (c) regulating the crap out of exchanges to lower the barrier of entry.
You'd get reasonably low spreads while eliminating the waste of resources caused by the high speed arms race. At the same time, for individuals who actually invest (rather than speculate/trade), the spread is a distraction. Access to markets and fees are the real hurdle.
Citation?
A) that jellicle thinks it's morally wrong? He certainly seems to think that.
B) That costs have lowered? Spreads have dropped 10-20x in the last 10 years. Here's the CIO of Vanguard talking about how that's benefited everyone who buys one of their index funds: