The Chicago Fed is concerned; see pdf link here:

http://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2010/cflmarch2010_272.pdf

They conclude:

1) Potential exists to generate errors and losses at speeds far greater than floor or screen base trading environments.

2) Risk management tools and regulatory oversight vary between exchanges, brokers, clearing members, and non-clearing members.

3)Their robustness to withstand loss from HFT is uncertain.

We at Themis are pleased that the SEC Concept Release is being digested by so many. We are still thinking it through here, as we want to make an educated comment that addresses systemic problems, and does not encourage unforseen consequences. We are pleased that different branches of government are each attacking the issues, as well as other  brokerage firms.  We are pleased that conferences are being held around the country. This is all good for the market that we all share. This was our goal from day one. We wanted to question, shine a light, and spark debate.

Consider this: months ago, Flash orders were defended, actionable IOI’s were defended, and anyone who attacked or questioned any high frequency activity was called antiquated. We just listened to a web conference with many noteable HFT personalities weighing in. We heard things like “I think we can universally agree that Flash, actionable ioi’s, and naked access are wrong…”

If only those same particpants  “who can all agree”  today all agreed five months ago. At that point they defended these same activities. Oh well.