Stockmarkets rigged by high-speed traders

I vaguely remembering somebody pointing out that you don't necessarily need to ban it outright.

Just tax them (alot) for each transaction and make it less appealing to do HFT.
 
Altima said:
I vaguely remembering somebody pointing out that you don't necessarily need to ban it outright.

Just tax them (alot) for each transaction and make it less appealing to do HFT.
Click to expand...

Other countries have tried adding a financial transaction tax (FTT) and it didn't t work out so well:

A strong proponent of the FTT, France has already put in place its own version of the tax that focuses on the transaction of financial instruments, excluding derivative products, for companies headquartered in France with a market capitalization over 1 billion ($1.3 billion). Although the country has been quite discreet on the primary results of this move, Eusipa, the European Structured Investment Products Association, has revealed that the turnover of structured products listed on French exchanges fell by 86 percent in the first quarter of 2013 compared to the same period in 2012. "Trading volumes in equities are not what they were around the world but France's bad results are said to be correlated with the introduction of the FTT,"
http://www.waterstechnology.com/waters/feature/2290083/financial-transaction-tax-doomed-to-fail
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A better solution would be to simply increase transaction fees substantially when a trading firm exceeds a certain number of messages per second so it wouldn't be profitable to send huge numbers of HFT orders that quickly get canceled.
 
Been happening for decades. This is what the financial sector does to the rest of the economy. Now they are doing it to themselves so everyone suddenly has a problem?
 
Altima said:
I vaguely remembering somebody pointing out that you don't necessarily need to ban it outright.

Just tax them (alot) for each transaction and make it less appealing to do HFT.
Click to expand...

Actually just a few rule changes would do it without taxes.

Preventing an order from being cancelled for 30 seconds once placed would screw up many of the hft strategies.
 
trew said:
Altima said:
I vaguely remembering somebody pointing out that you don't necessarily need to ban it outright.

Just tax them (alot) for each transaction and make it less appealing to do HFT.
Click to expand...

Actually just a few rule changes would do it without taxes.

Preventing an order from being cancelled for 30 seconds once placed would screw up many of the hft strategies.
Click to expand...
Was reading some commentary on the article and apparently the issue is spacial arbitrage brought about by the Americans having something like 50+ exchanges spread all over the place. So the solution the guys in the article came up with is a good one... time the sending of orders so that they arrive at all exchanges simultaneously:

Katsuyama and Ryan created a system in which RBC would send its orders first to the exchange that was the furthest away, and last to the exchange that was closest, with the goal of arriving at all places nearly simultaneously, cutting out HFT.
Click to expand...

Alternatively, just centralise somehow all buy and sell orders to do away with this problem altogether.
 
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