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The purpose of laws against frontrunning is to enable you to have a trusted relationship with your broker. There is no benefit to creating a trusted relationshi
by yummyfajitas 11y ago
The purpose of laws against frontrunning is to enable you to have a trusted relationship with your broker. There is no benefit to creating a trusted relationship with your adversaries.
Similarly, doctor/patient confidentiality laws are there to created a trusted relationship and make you comfortable admitting to your doctor that you had unprotected sex with lots of heroin addicted hookers in sub saharan Africa and you now need all the STD tests. In contrast, passing laws against journalists reporting on who visits hookers has no such benefit.
- JesperRavn 11y agoI really don't care about the law. The point is that if front running was legal, brokers would try to find ways to guarantee to their clients that they wouldn't do it. Similarly, the guy in the article advertises his exchange as preventing the equivalent of front running at the exchange level.
- mrchicity 11y agoTheir ATS can only exist by free-riding on the public price discovery in displayed US markets under Reg NMS. They protect their customers from trading at "wrong" prices by letting traders on faster exchanges determine what the "right" price is for them. As a thought experiment, imagine IEX captured 95% of market share as a displayed exchange. The 350 microsecond delay wouldn't matter since it's applied to everyone and there would be no reference markets for them to price against. It'd just be another market with a slightly slow matching engine. Relative speed still matters so fast traders would have an advantage.