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Is front-running illegal because the broker owes a duty to their client or because we want people to feel markets are fair? There are clear cases where HFT algo
by hft_throwaway 13y ago
Is front-running illegal because the broker owes a duty to their client or because we want people to feel markets are fair? There are clear cases where HFT algos disadvantage poorly placed orders (e.g. lazy portfolio manager rests a huge bid inside the spread, HFTs are likely to join or improve his quote and trade ahead of him) but isn't that just helping the markets move to the correct price more quickly? The lazy PM is hurt but another investor ends up getting a better price.
In any case it always strikes me as odd that the financial markets are the only place where untrained individuals decide to play head-to-head against pros and are then outraged when they lose. As long as access is fair and non-discriminatory I think that's all you can hope for.