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I would support idea to just price every transaction with a 0.0001% transaction fee. It should be enough to bring the whole HFT industry out of business while n

I would support idea to just price every transaction with a 0.0001% transaction fee. It should be enough to bring the whole HFT industry out of business while not having any impact on markets themselves.

koliber 13y ago
A lot of the HFT high-frequencyness comes from lots of orders beng sent to market. Only a very small number of these orders result in transactions. A transaction fee would not affect most of the order flow which never gets executed.
- hderms 13y ago
  there should be a small tax per order put out, even if cancelled and a small percentage-based tax on each trade. If that behavior has been determined to exacerbate price declines that externality should be captured in a tax and de-incentivized properly.
  - kylebrown 13y ago
    Ripple works this way, a fraction of an XRP is charged as a fee for each transaction (posting and cancelling offers). As a decentralized bid/ask ledger protocol, the fee is needed to prevent tx spam and DoS attacks.
  - KMag 13y ago
    If your goal is to reduce the maximum frequency of order inserts/cancels, it makes more sense to directly charge based on frequency. Several exchanges (the Hong Kong Stock Exchange, for one) rate-limit each connection to the exchange, charging fees based on the number of transactions per second allowed on the connection.
washedup 13y ago
There already are trading fees. Each exchange charges a small fee for every trade. It's how they make money and is why they have an incentive to increase volume. For example, on the CME futures exchange the fee per energy contract is usually 50 cents. Of course, those are only for trades that are actually filled. For quoting there are no transaction costs, but there are often rules to limit quoting (transactions/fills under a certain threshold, a total number of transactions per day, etc.). If these rules are broken, they often come with a fine.
- xntrk 13y ago
  This isn't true. "Each exchange charges a small fee for every trade" Not all exchanges charge fees for posting liquitity. Smaller ECNs will actually pay traders to provide liquitity. If you hit or lift someones bid or offer you will get charged a fee but if you post an order that does not cross against the current market you can get paided for. these rebates are very importatn for HFT desks.
harryh 13y ago
This is wrong. The tax will just be passed on in the form of increase spreads. It's like saying that if you add a 1% tax on food that all grocery stores will go out of business because their margins tend to be really small (around 1%). Clearly that's not what actually happens.
fnordfnordfnord 13y ago
They need to do something about quote spamming too. http://www.floatingpath.com/2013/10/05/hft-shenanigans-fmi-quote-spam-e-mini-liquidity/ http://www.floatingpath.com/2013/10/05/hft-shenanigans-fmi-q...

koliber 13y ago

A lot of the HFT high-frequencyness comes from lots of orders beng sent to market. Only a very small number of these orders result in transactions. A transaction fee would not affect most of the order flow which never gets executed.

hderms 13y ago
there should be a small tax per order put out, even if cancelled and a small percentage-based tax on each trade. If that behavior has been determined to exacerbate price declines that externality should be captured in a tax and de-incentivized properly.
- kylebrown 13y ago
  Ripple works this way, a fraction of an XRP is charged as a fee for each transaction (posting and cancelling offers). As a decentralized bid/ask ledger protocol, the fee is needed to prevent tx spam and DoS attacks.
- KMag 13y ago
  If your goal is to reduce the maximum frequency of order inserts/cancels, it makes more sense to directly charge based on frequency. Several exchanges (the Hong Kong Stock Exchange, for one) rate-limit each connection to the exchange, charging fees based on the number of transactions per second allowed on the connection.

washedup 13y ago

There already are trading fees. Each exchange charges a small fee for every trade. It's how they make money and is why they have an incentive to increase volume. For example, on the CME futures exchange the fee per energy contract is usually 50 cents. Of course, those are only for trades that are actually filled. For quoting there are no transaction costs, but there are often rules to limit quoting (transactions/fills under a certain threshold, a total number of transactions per day, etc.). If these rules are broken, they often come with a fine.

xntrk 13y ago
This isn't true. "Each exchange charges a small fee for every trade" Not all exchanges charge fees for posting liquitity. Smaller ECNs will actually pay traders to provide liquitity. If you hit or lift someones bid or offer you will get charged a fee but if you post an order that does not cross against the current market you can get paided for. these rebates are very importatn for HFT desks.

harryh 13y ago

This is wrong. The tax will just be passed on in the form of increase spreads. It's like saying that if you add a 1% tax on food that all grocery stores will go out of business because their margins tend to be really small (around 1%). Clearly that's not what actually happens.

fnordfnordfnord 13y ago

They need to do something about quote spamming too. http://www.floatingpath.com/2013/10/05/hft-shenanigans-fmi-quote-spam-e-mini-liquidity/ http://www.floatingpath.com/2013/10/05/hft-shenanigans-fmi-q...