[josephlord]

Using the analogy of the books you are raising the price in the milliseconds between the customer clicking buy and packets of that request reaching ebay's servers and all after the user has seen your price and stock availability a second ago. I don't think this acceptable business practice, if you have seen a price and a stock you should be able to place the order and (unless another order that isn't front running has arrived first to deplete the stock) the order should be fulfilled even if you show a different price to the next visitor to the product page.

I can sort of see that but I don't quite understand why there are different exchanges. I can't see the benefit except to those for whom it is an arbitrage opportunity.

I would also expect there to be low cost systems by which you could place simultaneous orders on all exchanges (at the cost of a slight delay in the order starting to allow them all to be posted at the same time as the furthest one.

The HFT still seems to add little real liquidity. The spreads that are shown may be narrower but the real spread seems much higher.

[bmelton]

> Using the analogy of the books you are raising the price in the milliseconds between the customer clicking buy and packets of that request reaching ebay's servers and all after the user has seen your price and stock availability a second ago. I don't think this acceptable business practice

Speed shouldn't be the factor for why this isn't acceptable. The seller doesn't know that there are orders in the queue for the eBay order, they're just raising the price. That they're doing it quickly is just a matter of efficiency.

> I can sort of see that but I don't quite understand why there are different exchanges.

Yeah. No idea there.

> I would also expect there to be low cost systems by which you could place simultaneous orders on all exchanges

There are.

[josephlord]

Fair enough speed isn't really the criteria. In the Ebay example Ebay know what price they showed the customer on the product page when they went to the checkout and should fulfil it if they can (provided the transaction is completed in reasonable time - a couple of minutes in the book buying world). This is maybe an illustration of the problem with the analogy rather than being a useful insight into the trading system.

[bmelton]

I think that the analogy works pretty well, surprisingly. I see no functional difference between changing the price in near real time as a reaction to another order on another exchange as I do "Hey, let's wait til midnight", which might equally screw the guy trying to put his order in at 11:59:59.

That said, I'm not an expert in the field, and I've just pieced this information from other posts. I have no strong opinion on the matter, but after throwaway's explanation (and all the subsequent discussion), my uninformed position agrees with his; that this article is exaggerative, and not indicative of anything being 'rigged'.

Moving fast, at least in my opinion, isn't cheating.

If they were raising the price on Ebay in response to the same customer's buy offer on Ebay, I would consider that unseemly, but not even necessarily unfair, as it only assumes that the buyer is willing to pay the newly raised price, and has approximately as much risk of losing the sale as making it.

[josephlord]

As far as I understand it a contract is made when there is an offer and an acceptance of that offer. If you are Ebay/Amazon I don't think that you can show one price and then just happen to change it as the user accepts it. The price charged should be the one offered. If the product page shows a price and user puts it in their basket and orders in within a reasonable time (5-10 minutes) the offered price should be honoured even if the price changed in the 5-10 minutes and all customers going to the product page at that point see the new price.

Note: This is not the behaviour I expect to see of share trading platforms but it is the way consumer goods sales should behave.

[harryh]

With the advent of electronic price labeling in retail stores we will soon live in a world where the price can change after you've picked up an item of the shelf and before you check out at the front of the store.

http://www.marketingmagazine.co.uk/article/1181195/real-time...

[josephlord]

I don't think that this would be legal in the UK unless on upwards changes the labels changed a reasonable[0] time before the prices. Unfair Commercial Practices Directive and probably some other laws would probably cover it.

[0] A small shop could probably do it much quicker than a large supermarket which might have to allow for people being in there for an hour.