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HFT and Systemic Risk

05

August, 2009

Man, slow days in the market are dangerous for idle and bizarre minds (mine). The more I dig, the more questions I come up with.

Today I am questioning the whole rebate trading game (payment for order flow by for-profit entities and exchanges). Some of these exchanges actually have accelerated rebate programs. Instead of paying their subscribers their monthly rebate in a lump sum at the end of each month, these exchanges actually pitch to the marketplace as an advantage, that they will pay the rebates WEEKLY instead, which will help brokers meet their net capital requirements with the regulators. You

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One Response to “HFT and Systemic Risk”

  1. HenryS
    avatar

    Yep – If cash flow is so poor that they have to rely on these – - and with the other items you have pointed out where they can buy and sell at the same price and still make money — what is really going on in the market place.

    Will you end up being black listed because you are bringing all of this to light?

    Or are you hoping your volume will increase enough so that you can join the group?


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