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Krugman is long talented in telling only a portion of a story to fit an agenda. The basic theory of the market is sound, that it reflects the value of a given

by thrill 16y ago

Krugman is long talented in telling only a portion of a story to fit an agenda. The basic theory of the market is sound, that it reflects the value of a given stock at a given time. High speed/frequency trading simply drives the market to that accurate point that much more quickly. That said, it's greatly unfair, IMO, that markets are allowed to provide information to select people (for an additional fee of course) that is not provided to the general public. These are supposed to be publicly traded stocks - by providing information to some that others don't receive until some delay (whether it's milliseconds to minutes), then there is nonpublic trading capitalizing on information not yet delivered to the public - this walks the fine line of insider trading, to me.

vecter 16y ago
Who is getting unfair information? Do you mean flash orders? Those no longer exist (for which I'm glad also). HFT in general though doesn't take advantage of unfair market information.
- thrill 16y ago
  As far as I know, flash orders are still legal - just not being offered by most exchanges due to the public heat they received for a period.
  - vecter 16y ago
    If so, then they should be disallowed. Regardless, they accounted for for a tiny fraction of all trading volume. I doubt most HFT firms make much from them. Saying HFT is bad because of flash trading is like saying driving cars is bad because once in a while, someone dies from a car crash. The latter part is a true statement, but that's 0.01% of the picture. On another note, it should be pointed out that flash orders were created by EXCHANGES, not by demand from traders. The exchanges didn't want to have to route orders to other exchanges because of NBBO, so they offered this to traders hoping that someone would come fill the order at NBBO.
tptacek 16y ago
Asking because I genuinely don't know: doesn't flash trading access (the quasi-"insider" stuff you're talking about) basically mechanize the same access that brokers/market makers already had by dint of serving as front-ends to the markets? A lot of these concerns seem to be predicated on the notion of the markets as interactions between simple buyers and sellers, and since so few people really understand how the markets --- even in old open-outcry markets --- work, I wonder how much of this controversy is really a side effect of more people hearing about the fundamental structure of the market.

by thrill 16y ago

vecter 16y ago

Who is getting unfair information? Do you mean flash orders? Those no longer exist (for which I'm glad also). HFT in general though doesn't take advantage of unfair market information.

thrill 16y ago
As far as I know, flash orders are still legal - just not being offered by most exchanges due to the public heat they received for a period.
- vecter 16y ago
  If so, then they should be disallowed. Regardless, they accounted for for a tiny fraction of all trading volume. I doubt most HFT firms make much from them. Saying HFT is bad because of flash trading is like saying driving cars is bad because once in a while, someone dies from a car crash. The latter part is a true statement, but that's 0.01% of the picture. On another note, it should be pointed out that flash orders were created by EXCHANGES, not by demand from traders. The exchanges didn't want to have to route orders to other exchanges because of NBBO, so they offered this to traders hoping that someone would come fill the order at NBBO.

tptacek 16y ago

Asking because I genuinely don't know: doesn't flash trading access (the quasi-"insider" stuff you're talking about) basically mechanize the same access that brokers/market makers already had by dint of serving as front-ends to the markets? A lot of these concerns seem to be predicated on the notion of the markets as interactions between simple buyers and sellers, and since so few people really understand how the markets --- even in old open-outcry markets --- work, I wonder how much of this controversy is really a side effect of more people hearing about the fundamental structure of the market.