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For many years George Soros has been suggesting that a tiny tax on transactions would eliminate a huge amount of high frequency bullshit (he was suggesting it f

For many years George Soros has been suggesting that a tiny tax on transactions would eliminate a huge amount of high frequency bullshit (he was suggesting it for currency markets, but the same applies here). I think he proposed that the revenue generated could fund the UN... It's about the same Bill Gates's suggestion of charging a penny to send an email -- no impact on legitimate use and a serious impediment to spammers.

xenophanes 14y ago
How does charging me somewhere vaguely in the ballpark of $36.50 per year qualify as "no impact"? And I'm just an individual. What about when I send to an email list and it goes to 100 people? Should Google Groups pay a dollar to send out those 100 emails? What about MailChimp, do they have pay $200 when they send out a newsletter to 20,000 people? I'm also concerned about how this money will be collected and how, from a technical perspective, all emails will be monitored. Every SMTP server will now have to be registered with the central oversight organization? VPNs and rogue email installations will be the enemy or blocked from communicating with anyone "on the grid"?
- jon6 14y ago
  I suppose bitcoin could be used as the technical solution. Maybe receivers of money can white-list certain senders so they don't have to pay anything to send to them. Then only spammers and unknown people would have to pay.
- Evbn 14y ago
  You may not be aware now, but postal mail is on fact charged per unit, no central registry needed, just a stamp.
  - xenophanes 14y ago
    I don't think you understand how email works. Or the post office for that matter. There's actually one single organization that all those stamped envelopes get sent through, it's not decentralized.
- dredmorbius 14y ago
  "A penny an email" is a figure that's tossed out, but it could be far lower. And let's ignore the technical aspects of how you'd go about collecting it (SMTP really isn't designed to make such payments easy, though we could bolt, staple, glue, and wire on yet another patch to the mess). The point is that abusive email -- brain-dead bulk spam, and even annoying recruiter pitches and "real" business adverts -- are sent in far higher volume than even the all but the very largest of mailing lists. The standard figure bandied about for most of the past decade is that some high-90% of all email is spam. Let's say 97% (as Microsoft reports: http://news.bbc.co.uk/2/hi/technology/7988579.stm http://news.bbc.co.uk/2/hi/technology/7988579.stm). Spammers are generating returns based on a small fraction of a percent response rate on an overwhelming volume of mail, which is close to free. Sender costs are estimated at $0.00001 (http://www.clickz.com/clickz/column/2138759/make-spammers-pay-before-you-do http://www.clickz.com/clickz/column/2138759/make-spammers-pa...). That's 1/1000th of a peny per mail, or a cent per mil (thousand mails). I suspect that raising that cost by even just a few cents per mil would be sufficient to put the brakes on most spam. For personal email, that would literally be a few pennies a year for even a high-volume correspondent. Protocols for mailing lists and other legitimate noncommercial use would probably rely on offsetting costs to users. In reality, proposals such as hash-cash, greymilter, targrubing, and the like extract computational work from an untrusted SMTP sender as a requirement for accepting mail. It's a pretty effective way to put the brakes on high-volume delivery. Computational power is a pretty reasonable proxy for coin of the realm. And if that's not enough ... there's plenty that's going on now with DKIM and other header validation that would serve to identify a sender. Extend that such that you don't accept non-signed mail (except at a very, very, very slow rate) and that you can associate a designated signer with a verified escrow account, and you've got much of the nuts and bolts of putting a system into place. Not that I see this as entirely desirable, but we may have to go there.
kaykurokawa 14y ago
I would dispute that charging a penny to send an email would not have an impact on "legitimate" use... there are certainly many "legitimate" email groups with thousands of users.
Permit 14y ago
Many exchanges want high frequency traders as market makers and pay them rebates for completed trades. High frequency trading is not inherently "bad". It's encouraged and desired by many exchanges.
- cma 14y ago
  Exchanges are paid by the trade, why wouldn't they want a high frequency of trades to occur?
  - Permit 14y ago
    I don't think we're in disagreement. The market maker wins, the exchange wins and the bid-ask spread is made smaller.
    - cma 14y ago
      Not really; at the margins we are at, people are trading a fair coin toss of a nickle on each traded for a weighted (against them) toss of a penny.
  - Evbn 14y ago
    And they are paid by people who want to trade.
- dredmorbius 14y ago
  Sounds as if the HFTs are initiating trades but not completing them. In network terms, it's a SYN attack -- you're opening a port but not connecting to it, or dropping it. A tax on uncompleted transactions might also help here. I'd say Soros's suggestion also has merits, though perhaps the incomplete transaction tax could be set somewhat higher. Neither would have to be large to make HFT grossly unprofitable.
  - Permit 14y ago
    >A tax on uncompleted transactions might also help here. I agree. My understanding is that regulations in my own country (Canada) are being put in place to mitigate such problems. I just think it is important to maintain the distinction between high frequency trading and high frequency quoting. They should not be condemned as one entity.

xenophanes 14y ago

How does charging me somewhere vaguely in the ballpark of $36.50 per year qualify as "no impact"? And I'm just an individual. What about when I send to an email list and it goes to 100 people? Should Google Groups pay a dollar to send out those 100 emails? What about MailChimp, do they have pay $200 when they send out a newsletter to 20,000 people? I'm also concerned about how this money will be collected and how, from a technical perspective, all emails will be monitored. Every SMTP server will now have to be registered with the central oversight organization? VPNs and rogue email installations will be the enemy or blocked from communicating with anyone "on the grid"?

jon6 14y ago
I suppose bitcoin could be used as the technical solution. Maybe receivers of money can white-list certain senders so they don't have to pay anything to send to them. Then only spammers and unknown people would have to pay.
Evbn 14y ago
You may not be aware now, but postal mail is on fact charged per unit, no central registry needed, just a stamp.
- xenophanes 14y ago
  I don't think you understand how email works. Or the post office for that matter. There's actually one single organization that all those stamped envelopes get sent through, it's not decentralized.
dredmorbius 14y ago
"A penny an email" is a figure that's tossed out, but it could be far lower. And let's ignore the technical aspects of how you'd go about collecting it (SMTP really isn't designed to make such payments easy, though we could bolt, staple, glue, and wire on yet another patch to the mess). The point is that abusive email -- brain-dead bulk spam, and even annoying recruiter pitches and "real" business adverts -- are sent in far higher volume than even the all but the very largest of mailing lists. The standard figure bandied about for most of the past decade is that some high-90% of all email is spam. Let's say 97% (as Microsoft reports: http://news.bbc.co.uk/2/hi/technology/7988579.stm http://news.bbc.co.uk/2/hi/technology/7988579.stm). Spammers are generating returns based on a small fraction of a percent response rate on an overwhelming volume of mail, which is close to free. Sender costs are estimated at $0.00001 (http://www.clickz.com/clickz/column/2138759/make-spammers-pay-before-you-do http://www.clickz.com/clickz/column/2138759/make-spammers-pa...). That's 1/1000th of a peny per mail, or a cent per mil (thousand mails). I suspect that raising that cost by even just a few cents per mil would be sufficient to put the brakes on most spam. For personal email, that would literally be a few pennies a year for even a high-volume correspondent. Protocols for mailing lists and other legitimate noncommercial use would probably rely on offsetting costs to users. In reality, proposals such as hash-cash, greymilter, targrubing, and the like extract computational work from an untrusted SMTP sender as a requirement for accepting mail. It's a pretty effective way to put the brakes on high-volume delivery. Computational power is a pretty reasonable proxy for coin of the realm. And if that's not enough ... there's plenty that's going on now with DKIM and other header validation that would serve to identify a sender. Extend that such that you don't accept non-signed mail (except at a very, very, very slow rate) and that you can associate a designated signer with a verified escrow account, and you've got much of the nuts and bolts of putting a system into place. Not that I see this as entirely desirable, but we may have to go there.

kaykurokawa 14y ago

I would dispute that charging a penny to send an email would not have an impact on "legitimate" use... there are certainly many "legitimate" email groups with thousands of users.

Permit 14y ago

Many exchanges want high frequency traders as market makers and pay them rebates for completed trades. High frequency trading is not inherently "bad". It's encouraged and desired by many exchanges.

cma 14y ago
Exchanges are paid by the trade, why wouldn't they want a high frequency of trades to occur?
- Permit 14y ago
  I don't think we're in disagreement. The market maker wins, the exchange wins and the bid-ask spread is made smaller.
  - cma 14y ago
    Not really; at the margins we are at, people are trading a fair coin toss of a nickle on each traded for a weighted (against them) toss of a penny.
- Evbn 14y ago
  And they are paid by people who want to trade.
dredmorbius 14y ago
Sounds as if the HFTs are initiating trades but not completing them. In network terms, it's a SYN attack -- you're opening a port but not connecting to it, or dropping it. A tax on uncompleted transactions might also help here. I'd say Soros's suggestion also has merits, though perhaps the incomplete transaction tax could be set somewhat higher. Neither would have to be large to make HFT grossly unprofitable.
- Permit 14y ago
  >A tax on uncompleted transactions might also help here. I agree. My understanding is that regulations in my own country (Canada) are being put in place to mitigate such problems. I just think it is important to maintain the distinction between high frequency trading and high frequency quoting. They should not be condemned as one entity.