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Re: High frequency trading and a 4ms faster cable

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On 2014-04-08, Dave Garland wrote:
> On 4/6/2014 8:05 PM, Randy Westlund wrote:
>> But what's the proper way to regulate this?  I don't think they're
>> doing anything wrong, but it's leading to undesirable behavior.
>> Regulation of HFT would be very difficult to do justly, I think.
>
> Put a 0.1% transaction tax on every completed transaction, and the
> problem would cure itself. And probably solve the national deficit in
> the process.
>
> Putting a 5s delay between bid and acceptance (or not) would probably
> do the trick, too. (I'm guessing that would make it comparable to
> manual floor trading.)
>
> I don't see why either could be considered "unjust".

I don't see anything necessarily unjust about that, but I don't
think it would solve the problem -- it would just change the time
scale.

In either case, algorithms would have to wait longer between trades,
either because they needed the share value to increase more to cover
the cost of the tax, or because of the hard limit caused by the
delay.  But we'd still have thousands of algorithms interacting in
nondeterministic ways and inexplicable share values that don't
reflect market conditions, which I think is the real problem.

Come to think of it... By skimming some off the top, the tax would
reduce the total amount of money invested in the market and reduce
the returns each person gets from investing in companies, which is
not what we want.

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Thread

High frequency trading and a 4ms faster cable RS Wood <rsw@therandymon.com> - 2014-04-06 19:20 +0000
  Re: High frequency trading and a 4ms faster cable Randy Westlund <Vorzakir@invalid.invalid> - 2014-04-06 19:44 +0000
    Re: High frequency trading and a 4ms faster cable Dag-Erling Smørgrav <des@des.no> - 2014-04-06 22:21 +0200
      Re: High frequency trading and a 4ms faster cable Randy Westlund <Vorzakir@invalid.invalid> - 2014-04-07 01:11 +0000
    Re: High frequency trading and a 4ms faster cable Hils <hils@saynotospam.net> - 2014-04-06 21:23 +0100
      Re: High frequency trading and a 4ms faster cable Randy Westlund <Vorzakir@invalid.invalid> - 2014-04-07 01:05 +0000
        Re: High frequency trading and a 4ms faster cable Dave Garland <dave.garland@wizinfo.com> - 2014-04-08 15:36 -0500
          Re: High frequency trading and a 4ms faster cable Randy Westlund <Vorzakir@invalid.invalid> - 2014-04-09 05:51 +0000
            Re: High frequency trading and a 4ms faster cable Dave Garland <dave.garland@wizinfo.com> - 2014-04-09 16:24 -0500
              Re: High frequency trading and a 4ms faster cable Randy Westlund <Vorzakir@invalid.invalid> - 2014-04-10 17:40 +0000
    Re: High frequency trading and a 4ms faster cable Hils <hils@saynotospam.net> - 2014-04-06 21:39 +0100
    Re: High frequency trading and a 4ms faster cable Hils <hils@saynotospam.net> - 2014-04-06 21:39 +0100
      Re: High frequency trading and a 4ms faster cable RS Wood <rsw@therandymon.com> - 2014-04-07 08:57 +0000

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