[rahimnathwani]

OK. So it's because there are multiple markets. We want multiple markets because competition, but multiple markets mean latency which means HFT using info from one exchange as a signal in another exchange.

If I could wave a magic wand then we would have one exchange which was run as a public service, by some beneficent person with no profit motive. I don't have a magic wand :(

I agree that the current situation is the result of the market structure (multiple competing markets) but I don't agree that this is how markets are supposed to work. The reason I say this is that people with no knowledge of market microstructure (e.g. ordinary people or people with undergraduate degrees in economics) would not expect this kind of 'arbitrage' to be possible. I hesitate to call it front-running because this is a term better reserved for instances where a client relationship and non-public information exists.

I take your point that the situation we have now (multiple exchanges without specialists) may be better than we had before (a single exchange with specialists) but I still don't think it's _fair_.

I wonder what would happen if I could wave my magic wand and have multiple exchanges with no specialists and zero latency...

[harryh]

If you could wave that magic wand big players with proprietary information (like hedge funds) would win a bit and everyone else (which includes you by the way) would lose because of slower price discovery.