[tails4e]

HFT seems like it should be illegal. The 'idea' of the markets is that its fair access to all, at least in theory. I understand there is always assymetry, but things like insider knowledge has been made illegal to try keep the fairness (or at least attempt). HFT does what no ordinary person can, its an unfair advantage. So should it not be banned? I recall there was a company setting up a market with a minimum latency, ensured by all trades going through a spool of miles of fibre optic cable in their office. The idea was to prevent HFT at source, which was cool, but a shame wider markets just let HFT slide, and the fairness assymetry widen.

[amsully]

The exchange you are referring to is IEX [1]. Michael Lewis (author of The Big Short) wrote Flash Boys about the intricacies of low latency trading and this exchange [2]. One of the primary "unfair" aspect of HFT is Front Running and has been illegal even before electronic trading (the name comes from traders racing ahead of big buyers in the trading pit). It was a big problem during the advent of electronic trading but has since been tamed. Exchanges arbitraging off their clients order books is another matter. Trading fast in reaction to real time (public) events is a market efficiency. Not accessible to the masses, but neither was traveling to wall street to place a trade.

[1] https://en.m.wikipedia.org/wiki/IEX

[2] https://en.m.wikipedia.org/wiki/Flash_Boys