Im aware of the scale of HFT trading and I've seen all the videos...I browse the nanex site all the time where they expose their shenanigans...but mostly it's not as serious as you present it. I'd be much more worried about HFT front-running due to their speed advantages, quote-stuffing, dark pools which hinder transparency, and liquidity being pulled when needed the most..
Widespread collusion on the contrary does not seem documented anywhere. I think, there are simply too many people in the markets for any one entity to corner them anymore but a few seconds at most. If anything, big banks etc. definitely collude long-term, because they combined have pockets deep enough to affect global markets. Like the LIBOR scandal, ISDAfix, gold fixing, aluminum fixing, many examples of this...And yes, game-theory proves that true self-interest indeed means cooperation and collusion, not competition. Just another blow to outdated free-mkt neoclassical economics if anything.
I've seen at least widespread subpennying on the options. When I put in an order in the middle of the spread it is instantly insulated by many orders. Wait a second, do it again... same thing. The only way I get in is by accepting temporary loss and I get out when it goes even higher after. In that regard they blatantly cheat like a mofo. Come to think of it if my broker has hft why is that happening?
It isn't widespread as hft costs more than 30k a month... as I said. There are not any billionaires making the marke in slowmode. Some dude in his undies putting in a limit to buy for 5000 worth of stock isn't going to prevent them from price fixing. They make the market and perform breakup large orders for people.
