Parasitic HFT that doesn't actually provide liquidity is a consequence of rules that are designed to provide liquidity. Think of what you would "expect" if thin

Parasitic HFT that doesn't actually provide liquidity is a consequence of rules that are designed to provide liquidity. Think of what you would "expect" if things were working right. Am I going to try to sell something at the exact moment a human needs to buy? No, I'm going to sell to a dealer who will hold it for a bit and then sell to a human who wants to buy. The dealer is purely algorithmic, so he may as well be replaced by a computer. From the article "On the positive side of electronic trading, the panel said, liquidity has improved, transaction costs are lower, and market efficiency is generally better." Relevant Monty Python: http://www.youtube.com/watch?v=ExWfh6sGyso http://www.youtube.com/watch?v=ExWfh6sGyso