This Law will would never be passed.Day traders want to trade Real time markets, not markets that have a delay.As I have previously stated who would want to leave an order in the book if it remains " locked" for upto 500ms it would be pure suicide and account destruction. I have no idea why we are even talking about HFT in 2012, its here to stay as is evident by the past few years- nowt is going to change.It very old topic to talk about HFT, latency etc.. Lets think of a new topic to discuss.
Just to put this into perspective; less than 10 years ago Eurex updated its prices every second, no faster. To my knowledge most people weren't aware of this at the time because it didn't affect their trading -not even the fast point and clickers. I don't agree with the description that it would be "suicide" to "lock" the markets up for 1/2 second. In fact I think that for the point and click traders there would be no discernible difference in their ability to enter and delete orders. I really doubt that any human traders are able to enter and cancel orders within half a second as things are. (But I concede that if a few are, then the difference for them would be marginal). Black box systems have been around as long as I can remember, and I don't think anyone is trying to say they should be outlawed. Let's just get rid of the parasitical and destructive elements of HFT and get the markets back into balance as regards having a healthy mix of participants. Too many posters on this forum seem to have been in the industry for all of 5 minutes and have no real perspective and practically no experience on how a healthy market operates.
Well said. I'm only afraid that the ruling gets "watered down" to appease an interest group and then there will turn up a work around (e.g. multiple companies working in collusion where one sells and the other buys and the other way round). The flash crash is one reason why I will battle on trading only currencies and the HFT antics are the reason why I only trade longer timeframes. IMHO The shorter the timeframe the more things change and the shorter the "life" ("survivability") expectancy of the trading setup (or trader) due to technological and regulatory changes.
The vote was delayed until "at least September" (and probably forever) according to a now-defunct WSJ link I posted earlier. I was looking forward to seeing what the 1/2 second rule would do -- I don't know much about the rest of this legislation, but the 1/2 second rule would have been interesting, and beneficial, too, in my opinion, as long as the big players weren't exempted, as has often been the case in the past with these types of rules.
Retail traders account for less than 1% of market volume. Doesnt matter if they come back. I dont have the research paper in front of me but there were calculations done to see what nominal $ value retail and retirement planing accounts traded. It equated to less than 1%. Retirees hold their money with mutual funds and pensions. Retail trades dont have the capital to effect volumes. Only institutional traders and institutions. Retail traders may have represented much high volume 30-40 years ago but now banks and hedge funds are prevalent and regulations allow them to trade. You can thank the 2005 SEC regulations for that.