Its not about access. Its about co location with super computers specifically designed to take advantage of a free market by jumping ahead of natural buyers and sellers. No amount of pleading by self interested parties will alter that. Did you know that when the SOES bandits were robbing the market makers blind, they were not allowed to use computers AT ALL to enter orders. We've come a ways , aint we.
You never did address the colocation question. How close is too close, any why? (By why, I mean: what moral principle dictates that "any closer than *this*" should be illegal?) If all you mean when you say "HFT" is "jumping ahead of natural buyers and sellers" using "super computers", then please say so -- because HFT encompasses a lot more than this, and people are going to get their panties needlessly in wads, trying to reason with you, when they simply do not understand what you are saying, possibly due to your inability to communicate clearly.
The fact that you ask the question about how many inches you can be from the exchange order matching servers , tells me all I need to know about your motives. Try that game on someone else.
I'm not even disagreeing with you, necessarily, much less trying a "game" on anyone. The implicit "you're one of THEM" might carry more weight if you didn't use it whenever someone tries to dialog with you. As I see that such attempts are fruitless, I will indeed be heading elsewhere. Have a happy thread.
This statement shows how truly naive you are about HFT in general. If you honestly think 'super computers' are required, they arn't. I can guarantee you that no HFT are having custom made CPUs designed and manufactured. And beyond that HFT calculations are usually dead simple, and dont require a heavy amount of computation, unlike prime factoring or physics simulations. The speed of a computer is always limited by the minimum clock cycle of the CPU, which in turn is limited by the physics involved with traditional silicon transistors. So their 'specifically designed super computers' are not going to be clocking much faster than your regular home computer. Of course, they arn't slowing down their systems by running windows or porn in the background like you As for your statement for 'jumping ahead' of natural buyers and sellers. Thats just tin foil hat paranoia. What you are describing there is insider trading (trading based on not public data), and if you think any exchange actively allows any of their clients to front run other clients. You need to start doing some research. I for one, have done HFT on a PC built out of store bought components. I am not co-located at the exchange (though I do co-locate on a fiber backbone). And I do not have _any_ knowledge of people's orders who arrive after mine. (And do not jump the queue in any sort of way beyond offering a better price).
Placing orders and immediately canceling happens all day long in the stocks I trade. The intent may not be to manipulate but the end result is manipulation because it distorts the true supply and demand of the market. Implementing an order cancellation fee would help solve the problem. As for co-located servers on the exchanges it certainly is not a level playing field as the average retail trader/investor could not afford the tens of thousand of dollars per month to co-locate.
And what comes out just moments after I posted this? Treasury gets $6.2 billion from Citigroup sales http://news.yahoo.com/s/ap/20100526/ap_on_bi_ge/us_treasury_citigroup
Stock. You are a moron. 1) Colocation - What do you propose here? Everyone in the world is required to enter their orders from ONE LOCATION. Otherwise someone is going to be closer to the matching engine than someone else and FRONT RUN them with the using the speed of light to their advantage. My grandmother in Ohio keeps front running my grandmother in California every time they are both trying to scalp the same penny with 100 shares on their online brokerage account. IDIOT. 2) Liquidity - Who do you think anyone is going to trade with if they ban HFT (Market Making with Computers). Is your piker ass going to be there to take down a million shares from Janus when they want to unload a position? Maybe you and my grandmother can take down a block of 500 shares. What will the spreads be like at this point with no HFT and a transaction tax? 25-50X current spreads. I hope to god you morons and populist can push thru an HFT ban, Ill be the first one in line to run back down to the floor and make you a dollar wide manual market with a 2 minute time option. Much easier money than fighting for mills. You have no clue what you are asking for, you obviously have ZERO understanding of market microstructure. IDIOT.
Well said! If someone is making money in a legal way - leave them alone. If High Frequency Trading funds are making money - fine, just do your own HFT fund and make money - pretty soon competition is going to take care of it, no need of any special laws. America is going further away from a free market economy, and towards a government controlled economy. This is just opposite of what is needed to get the country out of the hole it is digging. And one day the only way out of the hole will be to use nuclear submarines and carriers... And BTW the markets were at their most efficient on May 6 - they discovered the fair price two weeks in advance! So all this "What happened on May 6?" is pure bull$hit - supply overwhelmed demand and that's it, happens every day. I guess some people just don't like falling prices, as their portfolios look bad. And we all listen to them.