[theorique]

I like Nanex's work - the company has done a lot of excellent analysis of the progress of HFT over the past few years.

I'm wondering why there tends to be so much value judgment and moralizing in this area coming from various sources (such as Themis).

For example: HF traders are taking value from "real" traders ("real" defined by whom?), the systems are "too fast" (compared to what?) or quoting "too much" (compared to what?), and so forth.

Exchanges already seem to be penalizing participants with very high quote-to-trade ratios, suggesting that the existing regulatory and commercial system is responding to the needs of its stakeholders.

Maybe this kind of reaction is inevitable. I'm sure that there was moralizing in ancient Greece when some entrepreneur bought a load of olive oil at a low price in Athens and ran it on a fast chariot to Thessaloniki, unfairly undercutting the honest merchants of Thessaloniki and pocketing a tidy profit through their "high-speed trading" … same thing with those who used an undersea New York - London cable to gain advance knowledge of events.

[Retric]

The point of the stock market is to create a liquid market for businesses and investors. HFT who don't actually keep any skin in the game is just a market efficiency which is best dealt with by changing how the market operates not flooding it with 100 billion meaningless buy and sell orders a day.

EX: Put a 24 hour hold after a stock transaction is held before you can sell and you just killed 99% of HFTing.

[theorique]

Put a 24 hour hold after a stock transaction is held before you can sell and you just killed 99% of HFTing.

Not just HFT - you just killed some significant fraction of all forms of trading. Bought something and it's declining? Oops, too bad, you're locked in - better wait 24h. The arbitrary phase shift of transactions will add massive amounts of complexity and create a new system to be gamed.

Edit: Also, regarding "skin in the game" - the recent $440M Knight fiasco shows that firms participating in all forms of HFT are exposed to real financial risk. They definitely have some skin in the game.