[logfromblammo]

My hypothesis is that the current system is most profitable for the people running it.

Using continuous trades, the difference between the price someone would accept/pay is usually very close to the price they do accept/pay. That's because arbitrageurs are continuously taking tiny little bites from the theoretical benefit of trade to the buyers and sellers until everyone is almost indifferent to trade, regardless of the actual price they had in mind. The trades are spread out by time, such that each one can be attacked separately (by a sufficiently fast attacker).

The system is set up to consume the big triangular areas on the supply vs demand chart that do not actually impact whether a trade takes place.

If you settle multiple trades at once rather than a continual series of individual transactions, there are fewer opportunities to take a bite out of other people's trades by being a very fast middleman.

Also, the only way to test your hypothesis is by comparing it against every other possible trading system. So I'd probably start off with a less ambitious claim, like "the current system is more fair than what Log from Blammo proposed." That way, it could be tested just by setting up the competing system and watching what happens.

[kasey_junk]

I actually think there are lots of trading schemes that could prevent speed being a major advantage, but discrete time auctions are not one. They just change who gets the time advantage. The only way to remove time advantage from the field would be to make it so that order time was not calculated in fill priority. There are markets that do this currently (pro-rata markets give larger orders priority over smaller ones regardless of order time). There are also markets that have tried randomized matching and other esoteric methods. Not many people liked trading this way so volume dried up.

If we really wanted to remove time priority, my favorite way would be to add near infinite price increments. Then if you wanted to pay for priority you could in an explicit way.

I'll buy that my hypothesis was overly broad. Let me rephrase it to, "The current system is way better than the previous system, and I've heard no systems that don't have obvious flaws as compared to the current system."

[logfromblammo]

It isn't just about time. If someone knows what you are willing to pay, they can engineer their trades such that you pay exactly that. When the system itself is not paid unless you pay less than you were willing to pay, there is a built in incentive to not reveal that information to potential middlemen.

In that context, trade speed doesn't matter. If arbitrageurs cannot profit by breaking your trade up into two trades with themselves as middleman, it doesn't matter how fast they are.

Aside from that, any system where trades can occur faster than information can enter your eyeball, process in the brain, and shoot down your arm to click a mouse button is one that unfairly disadvantages the unaugmented human participant.