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HFT seems different. It is comparable to front-running other people's orders I think you're confusing HFT (which is a broad term) with flash trading.
by cturner 16y ago
HFT seems different. It is comparable to front-running other people's orders
I think you're confusing HFT (which is a broad term) with flash trading.
- yummyfajitas 16y agoMechanics of flash trading: say the best ask price on INET is 100, the best ask price on ARCA is 99. If you place an order buy at 99 on INET, INET is legally obligated to route your order to ARCA (since ARCA has the NBBO). You will pay 99/share + commission + routing fee, with the fees paid to ARCA. If INET were to flash your order, they give some HFT firm the opportunity to sell you shares at 99. The HFT firm can accept or reject - if they accept, you pay 99/share + commission and INET gets the commission. That's a completely different game than front running. It has other issues, like being potentially unfair to ARCA and traders who can't afford flash orders, but it isn't front running.