Covalence

Let's Share

High Frequency Trading

Free markets, new technologies, business models, and as little regulation as possible - we're all about it. I'm stoked to see pressure on the exchanges this week to limit services that provide an unfair advantage to high frequency traders. I'm not generally opposed to the concept of people using technology to get an edge...it's the age we live in. My opposition lies in the practice of the exchanges themselves allowing HFTs to co-locate servers on-premise and give them information to prices and volume before others. So not cool.

With people running public companies - and the markets - it's a fact that there will always be individuals that have such information first. But companies providing information to people first through a chargeable service is bordering on an ethics problem. And if you cannot afford the service? You're out. Hat tip to news service companies like Marketwired, Thomson Reuters, and Business Wire who have already stopped early release information to people willing to pay more. A moral code - nice!

At any rate, HFTs will find real estate closer to the markets and already have in the public real estate market. But the exchange markets themselves allowing (and even profiting) from that should come to a screeching halt...like yesterday.