HFT defended in 30-something page Report BY HFT Sponsor. LOL.
There is a report being passed around by one firm , who self-admittedly counts ” a handful of HFT firms as sponsored access customers”. Firstoff, anyone want to guess what % profit for the “agency broker” these “handful of HFT firms” account for?
He dismisses our concerns with HFT (“a blog post here, a white paper there”) as not meaningful. Senators, hoardes of buy-side traders, traditional broker dealers, and the longtime owners of our financial systems (ie John Q Public) disagree. I actually find it amusing to note the lack of trading experience, and lack of long term perspective, among the most vocal critics of those who question HFT. In addition we are amazed that every defense of HFT that we see in mass media is raised by either those who work in HFT, or are a consultant to HFT, or a technology provider to HFT, or an exchange courting HFT flow, or someone selling access to HFT.
As for us we have no stake in this debate. Actually you could argue that we should keep quiet, as the more sinister a market environment created by HFT, the more value we can add to the trading equation, and the more successful our firm will be. So why are we raising Cain? We don’t think this market environment is healthy, and we plan on being around for the long haul. It would be nice if the market were not blown up in the interim.
Our concerns our summarized here: http://advancedtrading.com/algorithms/showArticle.jhtml?articleID=220300593
And we think we can be more succinct than their 34 page defense:
Is liquidity in the already-liquid top 100 names in the market, and sub-penny price improvement, worth creating a multi-tiered and opaque market self governed by the same folks, who have already time and time again, demonstrated their lack of ability to restrain from highly damaging excess?
One more point that should tell you everything you need to know. Notice the hoardes of talent poaching and defections from traditional brokerage firms and exchanges (not typically underpaid folks to begin with) to HFT firms?
I sure hope rationality trumps greed by the time this is said and done.