[geekpondering]

> Exploiting Market Inefficiencies == A More Efficient Market. The whole idea of "buy low, sell high" is exploiting inefficiencies in pricing, which is all HFT's are doing.

There's a difference between pricing inefficiencies and technology inefficiencies. In theory there should be equal access to markets. This is why SEC laws on disclosure exist. When people with greater technological ability can, in effect, toll everyone else, you are eliminating this idea of equal access.

> The HFTs are HIGHLY incentivized to not destabilize the market because they stand to lose a LOT of money if they make a mistake.

So are all traders, but that doesn't stop things like Enron and Lehman Brothers from creating smoking holes in our economy. When you start creating legal fictions and technologies that are barely understood by those that create them, much less those that provide executive oversight, government oversight, or the general public, you are getting into very dangerous waters.

Software only works as long as the assumptions of the programmer stay valid. HFT quants are incentivized to make their companies money, not to protect the market at large. An application on a desktop computer crashing and exhibiting weird behavior isn't a big deal. A HFT process going rogue is going to cost a company millions or billions of dollars at best.