Another shameless HFT defense
We try not to react to all of the shameless, self-promotional defenses that the HFT lobby constantly pumps out lately but this latest one needed some comment. The article is titled “A Defense of High-Frequency Trading” http://www.realclearmarkets.com/articles/2011/01/07/a_defense_of_high-frequency_trading_98822.html. It is sure to get a lot of play in the HFT community. Here are a few points from the article:
“If the mutual interaction of trading programs creates inexplicable sharp swings in stock prices, the best way to “correct” them is not further regulation, but rather to let other profit-seeking traders (either computer or human) respond to those swings and drive prices back to their natural level. A free market is naturally self-regulating.”
“Government-imposed artificial limits such as trading halts and short-sale bans merely delay (or prevent) traders from finding mutually acceptable equilibrium prices. As Hoenig observes, government regulations only serve to increase the very market volatility, uncertainty, and fear they were supposedly intended to “correct.”
“Although I am not a trader, I benefit from efficient capital markets that allow investors to freely allocate their resources to maximize their profits. For me, efficient trading markets mean a better life in the form of cheaper food, exciting new consumer products (such as the iPad), and life-extending innovations created by medical device manufacturers (such as improved MRI scanners). If the widespread adoption of computer-assisted trading means that regulators are less able to hamper such markets, then I consider that a feature, not a bug.”
The article was written by a fellow named Paul Hsieh. Never heard of him? Neither had we, so we checked him out. Paul Hsieh, MD is a physician and co-founder of Freedom and Individual Rights in Medicine (FIRM). What’s FIRM you say? From their website:
“FIRM holds that the only moral and practical way to obtain medical care is that of individuals choosing and paying for their own medical care in a capitalist free market. Federal and state regulations and entitlements, we maintain, are the two most important factors in driving up medical costs. They have created the crisis we face today.”
So, basically we have a libertarian, no rules medicine guy supporting HFT. Well done HFT. Maybe you get the Unabomber to write you a HFT manifesto from his Supermax cell in Colorado next.