What's the difference between HFT front-running and Insider-trading?

What are you talking about. How do 2 or 5 exchanges where one and the same product is traded benefit any end consumer? It enriches any additional exchange without serving any purpose whatsoever.

That is what we have? What the heck are you talking about? Quote larger and more often and you get to see price changes before anyone else. Pay extra and you can utilize special order algorithms that others cant. 100 shares in the limit order book should always be treated equally to 1 million shares, meaning, at the same price if the 100 share order arrived earlier then it should have strict precedence over the 1 million share order. This is NOT the case today. And if you don't know that then it does not mean it's not true it simply means you are uninformed.

The barrier to entry is money? Lol, yes so is it with every single industry. I can buy your wife for a night, it's just a matter of price and putting you into a desperate enough position where you value money more than possibly now. The whole quest of ethics and morals is to take monetary advantages out of the equation as much as humanly possible. And we are light-years away from that.

qlai said:
Don't agree - competition is good, but what we have now is out of control.


I totally agree, but that's what we have now. The only barrier to entry is money, not unlike other industries.
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Perhaps this is a good time to share this quote and link.

"The SEC fined the NYSE and its parent NYSE Euronext, a subsidiary of Intercontinental Exchange ICE, -1.47% , in 2012 for violating Regulation NMS over an extended period of time beginning in 2008. The NYSE sent trade prices and details through two of its proprietary feeds before sending that data to the consolidated feeds that provide trade and quote data to the public, according to the SEC."

https://www.marketwatch.com/story/whistleblower-award-for-nyse-fine-goes-to-hft-critic-2016-03-01
 
@GRULSTMRNN , it's hard to talk about issues when people mix up different markets and different problems they are experiencing.

I understand what you want - fair markets. I want same! What I hate is when regulators choose a scape goat and blame all ills on them to take attention away from their inadequacy. HFTs, just like any other participant, have their share of blame, but they were not the ones created the situation. Our fight should not be against HFTs, but against regulators who allow unfair advantages to exist. The first item on my list is democratization of market data. The data belongs to us, not the exchanges!
 
"To achieve the unprecedented magnitude of HFT profitability over the last five years, HFTs needed the advantages provided by HFT-oriented special order types and corresponding order matching engine features – advantages that enhanced the profitability of HFT strategies through artificial and anti-competitive means. Especially from 2007 onward – when REG NMS was introduced into the US equities markets – such features were provided to HFTs through a number of exchange “innovations” that supercharged HFT run rates. Ironically, many of the most abusive features were introduced under the pretense of complying with REG NMS, the regulatory framework of the national market system meant to protect the investing public. In practice, many such features served to assist HFTs in circumventing REG NMS, leading to a two-tier system in which HFTs benefitted from deep and deliberately crafted asymmetries in order handling treatment that advantaged special order types over the traditional order types commonly employed by the public customer."

Haim Bodek, The Problem of HFT: Collected Writings on High Frequency Trading & Stock Market Structure Reform (2013)
 
I can think of a reason for HFT to be really important. More important than retail.

There has to be a chain of HFT arbitrage that can enable a cash bond to trade against stocks in a dark pool.

These are the 'end of the line' in the liquidity game. These two are the ultimate source of all liquidity for the CME biggest revenue stream: ECBOT rate futures and CME index futures.

Making sure that liquidity providers are getting paid (arbitrage) to maintain this link is more important than any liquidity that retail can provide.
Seems pretty simple.

P.S. Haim Bodek talks about how there are like 12 different dark pools and they are all expensive to access. He said that nobody has access to every single one, certainly not retail brokers.
 
What happened is that, from 2007 to 2009, the exchanges created features that were primarily requested by HFTs, in particular, order types and order matching engines that basically modified the order handling of the stock exchanges, that heavily disadvantaged ordinary traders/investors (retail and institution alike).

 
You are just playing with words and a blame game. Who was responsible for the 2008 financial crisis? Chicken or egg? Correct answer: the president promising everyone deserves their own homes no matter how undercapitalized a household, banks, rating agencies and consumers.

Equally here, regulators (SEC, CFTC,..), hft, banks and exchanges are responsible for this mess because they all created a pay for play arena where the bigger the better. I never singled out hft. I ALWAYS pointed to the actual problem: markets are currently not fair and equitable, a law and regulation originally created to not disadvantage anyone unfairly. Nothing is fair today in financial markets. Because all the big institutional and government players enriched themselves through bribes and corruption. And I tell you why nothing will change:

Because Americans love people with money. Most Americans hailed from countries and origins that equalize money and wealth with an enviable lifestyle, but nothing could be further from the truth. Most disproportionate wealth was created through lying, cheating, killing, bribing, corrupting and disadvantaging others. Those people all immigrated to the US with their twisted understanding of wealth and how rich people must be respected and not questioned. You see it in every election cycle. Check out the wealth of senators and house of representatives. Those are the ones who have power over regulators and market participants. Yet they are all part of the same ilk, most are multi millionaires themselves who DIRECTLY benefit from the filth in the industry and receive indirect kickbacks.

When people actually primarily vote for those who uphold ethical and moral values rather than for those who they see as wealth role models then things will change. As long as the dumb public drools over some schmuck on TV who sits in a Ferrari and smirks with 10 sluts in his arms and tries to sell his latest snake oil nothing will change. As George Carlin rightly said, garbage in, garbage out. Politicians are as corrupt and stupid as the general public. The current executive and legislative and administration is the best the US has to offer. Garbage in, garbage out.

qlai said:
@GRULSTMRNN , it's hard to talk about issues when people mix up different markets and different problems they are experiencing.

I understand what you want - fair markets. I want same! What I hate is when regulators choose a scape goat and blame all ills on them to take attention away from their inadequacy. HFTs, just like any other participant, have their share of blame, but they were not the ones created the situation. Our fight should not be against HFTs, but against regulators who allow unfair advantages to exist. The first item on my list is democratization of market data. The data belongs to us, not the exchanges!
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wrong, wealth is creation of GDP. the wealth your are talking is THEFT and Robbery of 'wealth' or transfer of wealth from the public and workers who CREATE the wealth.
owners of capital own the wealth. wealth can be destroyed with on nuclear war or bomb or natural cataosphe or riots.

The riots you see in Hong Kong, south America, iraq etc is protesting poverty or lack of wealth by the youth. who are ripped by people who own assets and own the companies and slave to MASTERS.
the capitalist system in it's true form is just peasants and feudal lords..workers are paid barely to pay rent and food and rely on welfare state or mercy of the landlords or lords. you know what a slave revolt is .. the slaver owners are killed by the slaves.
 
the 'exchanges' for equitiest is now mostly for money laundering and tax purposes and most mutual funds only buy stocks that are traded in 'regulated' exchange. unless your listed in the NYSE , your not investable grade..but SEC has now even devalued the NYSE listing with lack of regulation.s

otc markets like Nasdaq, other BS exchanges are mockery of real equity markets or 'real markets' total bs markets.
 
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