|
In response to situation (2), I want to first tighten the language - as it stands, I'm not sure if it's even possible. By computers, I think you mean exchanges (for example, Nasdaq, BATS, etc.) So somebody wants to trade 50 shares there. Let's say they want to buy at $10.00, and there's no sell orders on NASDAQ but 50 shares on the offer at BATS. 1) If you were doing this through a broker, and that was the state of the book, then they would just route your order to BATS (if I'm not mistaken that's a legal requirement for brokers).
2) If you instead placed the order to be on Nasdaq-only, that would lock (have buy and sell orders at the same price) the national book, something which is not allowed due to Reg NMS. So Nasdaq could not display that you want to buy at $10.00 anyway, and (I'm not sure how they implement their stuff) either hide your order or display it at another price. So I'm not sure how exactly you're framing this situation. If the HFT's computer can see that your order exists, it's because it posted. If it posted, it could not have had the limit price that would've locked the book. I may be misunderstanding what you mean when you say at the end that the "two computers reconciled their orders" - because nothing like that does happen. If they are computers at the same exchange, then no, that's simply not how matching engines work. If at different exchanges, then there is no reconciling, your order would not have posted at the right price, or your broker would have not tried to get you best execution on your order(which they are bound to doing). |
No; as I responded to another post in this subthread, I mean multiple computers belonging to a single exchange, such as NASDAQ. In one of the previous HN threads on this topic, somebody linked to a post that showed the situation I'm talking about; I'll see if I can find it.