Unfortunately, this is why we are all going to get nailed with a new "transaction tax." The facts about it's effects on the markets will not matter. Obama and Krew will only see how guys like these "make billions while stealing from investors and disrupting markets..."
The sad fact is most people don't understand the difference between trading and investing. The downside is traders are going to have to pay for other people's bad investment decisions. There's an article in the NYT today on Optiver being investigated for their high frequency trading on the oil futures market: http://www.nytimes.com/2009/09/04/business/global/04optiver.html Does the press have something against high-frequency trading?
Zero Hedge has a nice slant on this article: http://www.zerohedge.com/article/more-observations-market-manipulation-masking-providing-liquidity
Unbelievable. Being a owner and operator of HFT strategies, i am amazed at the attentions that this really very "niche" business is getting. And suddenly firms like Getco are on the front pages of magazines (Forbes, WSJ). And I have seen plenty of automated systems driven "action" that pushes the market around. Let's face it, if you drop $2B into the market, the market will go in your favor for a little while. Since I know some of the names contained in those article, what are they thinking? HFT doesn't make *that* much money, I have yet seen any HFT trader making $100M (ok, maybe misha came close). This is my prediction what will happen. A whole lot of nothing. They will outlaw "flash orders" (very little volume comes from that anyways), and put a cap on holding limits. And then the politicians are going to declare victory. And come 2010 election cycle, we will be filled with ads like this: "I am John Doe, congressman from your state. I *FOUGHT* for you, the Main Street, against the Wall Street Fat Cats. I was instrumental in out lawing illegal wall street practices like Flash Orders, and limit their capability to manipulate the market. I am on YOUR side, the average American Investor. And I want to fight for you for 2 more years." Mean while, the market just laughs at it, and business continues on as usual.
........................................................ 1000% correct.... Also...the transaction tax will NEVER happen.... Computer banks can be anywhere....software can be anywhere.... And those who own them will seek the least cost jurisdiction to operate in.... Worldwide agreement wll NEVER happen as to such a tax as well....
if the co. trades in the US or is US based or the brokerage firm is US connected u will pay the tax. libertarian philosophy goes out the window when somebody has a gun to your head. capish?
dual listing will be common as brokerage houses will be setting up llcs outside the country and finding any loophole you can find will be found. look what they did with online betting and how you couldnt make a deposit from a us bank to an overseas betting house. they just came up with an llc and funnel the business. where theres a will theres a way.
................................................. Dual....triple....listing.... The bottom line is that HFT is here to stay.... Want a wide b/a or practically no b/a.... Quite frankly....a company should domicile where efficiency lives.... ie....quickly peruse the simple example of transaction costs in IB.... Why should the cost be any different for any security....? Taxes, legal...etc....are the only barriers to even prices.... Electronic entries and exits are homogeneous.... But "dark pools"....this is different....this is when "public securities" are turned into "private" and then "public" again....black, gray whatever.... should be banned.... If a fund manager wants to make money....well money is money....on a first come first served basis....it does not matter if the security is held for a fraction of a second or 20 years.... An exchange becomes HFT....they are never investors.....why should they retain a license of less efficiency ? Why not some HFT securities that are available for investment ....? Same thing for toothpaste or any other product that has a price.... Quite frankly any country that imposes inefficiency deserves to lose the business....they should lose the business.... Innovation capital should be tax free in every form....for the direct benefit of the public in general....