[kasey_junk]

We had that system, it was dominated by expensive pit traders and the spreads (the main cost driver for most people) were gigantic.

This argument is precisely Luddite and a strange position for anyone on this particular forum.

[steveBK123]

No sure why this got downvoted, and I'm not sure what else people think "humans competing for that money" would look like?

You're gonna need to physically collocate those people if you are trying to ban computers and latency based trading. Possibly in a "Pit" maybe in a building called an "Exchange" in places with a lot of financial services people like say NY or Chicago. Probably need to have some sort of membership/license requirement due to finite space. I dunno. Sounds like a novel concept that's never been tried.

[tastyfreeze]

Before the internet? Things are a bit different now. HFT monopolized the market maker/arbitrage money with millisecond executions that nobody can compete with.

[steveBK123]

You said "If low latency trading was banned real humans could compete for that money."

As soon as you re-introduce distance, latency becomes a factor again. How do you eliminate "low latency trading" and prioritize "real humans" without putting them in the same room?

What do you actually propose here?

One way to reduce the impact of latency is to do away with continuous trading and move to frequent but discrete auctions. But this would just increase volatility.

Imagine if every X minutes / hours stocks moved Y% like they do at market open, as all the information that was disseminated since the last auction was re-priced in.

If anything the long term trend has been towards longer continuous trading sessions to reduce those types of jumps.

[kbelder]

I've wondered if introducing a small but omnipresent random delay in all trading requests might suffice. Something like 0-100 milliseconds. Just enough to moderate some of the advantage that physically co-located automated traders have, while not outright banning it.

[steveBK123]

It's an interesting idea, IEX basically did something non-random with introducing latency.

A consideration is once you do this, the business model of exchanges changes a lot (they make a ton of money on colo).

So they need revenue elsewhere, so maybe free retail trading goes away again, who knows.

[tptacek]

Whenever this topic comes up I always wonder how many people commenting have ever heard of the odd eighths scandal.