Nano Nano

A well-written rant about the introduction of high-frequency trading in Australia:

In the Australian Stock Exchange’s Sydney data room, which is about the size of a big lounge room, there are six “cuckoos”. These are the banks of servers installed by high frequency traders.

They sit against the wall opposite the ASX servers and each is connected directly into the host by a fat fibre optic pipe. Each cable is precisely the same length by agreement with the ASX so that none gets an advantage; if one server is closer to the input, its cable is looped around to lengthen it.

Think about that: one less metre of optic fibre carrying data at 299.8 million metres per second would give one share trader an unfair advantage over the rest. It suggests that something pretty quick is going on.

The question is whether it’s fair to the rest of us; whether those six parasites with their suckers fastened directly into the heart of the ASX should be allowed to get away with it.

And another:

HFT firms and stock exchanges essentially gouge the public on every trade, and split the spoils between themselves.

Finally, from zero hedge, an essay about the consequences of HFT; the market is dying because people, realizing that they are being ripped off and that the authorities will do nothing to stop it, are taking their marbles and going home.

we now note that none other than Morgan Stanley’s Quantitative and Derivative Strategies released a note which, with a three year delay, effectively predicts the end of capital markets in a world where every declining retail participation (another topic we have been hammering for the past 3 years as it is only the most natural response to a world in which not only equities are openly manipulated by central banks, but in which perpetrators for massive market disturbances are neither identified nor prosecuted) is replaced by artificial high frequency trading churn, which never was and never will be a true liquidity provider on a long-term basis

But then this is just part of the inevitable end of the whole Ponzi-based system of wealth transfer that we currently endure.

Both comments and trackbacks are currently closed.
%d bloggers like this: