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HFT does not have more information. They have access to the same public information as everybody else, but they have invested in better technology and are there
by reverend_gonzo 13y ago
HFT does not have more information. They have access to the same public information as everybody else, but they have invested in better technology and are therefore able to parse and utilize that information more efficiently.
Insider trading, by its definition, is insiders trading on non-public information, that outsiders simply do not have access to for any amount of money.
- Pxtl 13y agoIf I tell you that I know privately a piece of news about company XYZ that's about to become public tomorrow, and then you use that knowledge to trade based on how you know its shares will change, that's insider trading. If I tell you that I know privately a piece of news about company XYZ that's about to be come public in 0.25 seconds and your machine is fast-enough to parse and react to this information before that deadline, that seems pretty close to insider-trading, it's just the "insider" is the exchange itself.
- djoldman 13y agoAnytime you act on information that isn't public whether it's a year or a second before it becomes public, your act is illegal. HFT's do NOT have such private information. Everyone has the same information.
- harryh 13y agoIf you work for company XYZ, or XYZ has hired you in some capacity only then is it insider trading. And that's because you have a fiduciary duty to XYZ that you have violated by releasing their secrets.
- reverend_gonzo 13y agoIf you release private information on an exchange (by for example, buying up a million shares), first, you just committed insider trading, which is illegal, and second, you just made that private information public (showing that their is a much greater demand than the market believed). Once it hits the exchange, it is public information, and anybody is now free to act on that information.