Exchanges in bed with HFT? No way!
- Thread starter qlai
- Start date
Really? Who would've ever thought the exchanges would do that? Aren't they in the business of helping the poor peasant traders? Aren't they all angels in the business of doing good?
I guess you are not using stops in your trading and/or not affected by slippage. Weren't you the one saying how important good quality data feed is for day trading?
We're all affected when National Exchanges provide PUBLIC information to one group prior to another.
day traders need quality data and speed.
HFTs need even higher quality data and speed because they are competing against other HFTs
When market is moving very very very fast, those traders who trade at home probably can't trade
due to extremely wide spread, terrible lag, terrible slippage, monitor display freeze....
I usually avoid trading such market.
Even those traders who trade from Trading house (which has quality data/speed) will find trading very challenging because human brain CPU could be limiting factor.
You are correct, but you are forgetting that there are many automated traders and that your broker also uses data feeds and order gateways. When I ask my broker - how come I see thousands of shares traded but none of mine filled - I don't want to hear that it's because they don't have same access to the market as HFTs. That should not be a valid excuse for poor execution quality.
"You are correct, but you are forgetting that there are many automated traders and that your broker also uses data feeds and order gateways. When I ask my broker - how come I see thousands of shares traded but none of mine filled - I don't want to hear that it's because they don't have same access to the market as HFTs. That should not be a valid excuse for poor execution quality."
Are they holding your order upstairs or just violating reg. NMS? What broker are you using so the forum can avoid them?
Are they holding your order upstairs or just violating reg. NMS? What broker are you using so the forum can avoid them?
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I was just giving an example. You can't avoid this because brokers have no obligation nor incentive to reduce latency. They are not violating RegNMS, but RegNMS compliance does not force them to be reasonably fast(compared to HFTs or even peers). This is why many Buy Side firms use Sell Side firms to handle orders for them - they don't have the technology nor relationships. The same reason many brokers simply choose to send orders to HFTs and let them comply with best execution.
All I am advocating for is that SEC must establish an acceptable benchmark in which an order needs to get to the exchange. This way, brokers can differentiate themselves and competition will close the gap with HFTs. This way, a broker charging commission can show how they save/make you money on execution over zero commission brokers. Nobody expects them to be as fast as HFTs, but having no accountability whatsoever is unacceptable, imho.
that is the situation when brokerage firms can get paid for order flow. They win. You lose.
It's my opinion that PFOF is not the issue. It doesn't matter to me if the broker is sending orders to HFTs or trying to work them themselves ... what I care about is who is introducing latency in my order processing, how much, and why.
Where do you think you will get better execution - a) broker that is getting slow data feed, slow order handling/routing, and tries to fill/internalize your orders themselves. b) broker which quickly(hopefully) sends the order to HFTs which have fastest data feeds and order handling/routing. The answer is - we have no idea. But Sell Side does as they do Transaction Cost Analysis and use multiple brokers for comparison. Why can't this kind of third party analysis be required to be done for retail brokers? Much easier to blame everything on HFTs.