EU: Let's cost financial traders $400m a day, because EVIL BANKERS. Right? Hurrah! The European Union has decided to save us from the perils of automatic trading! Also known as High Frequency Trading (HFT) or algo trading, this is simply the practice of writing a piece of code to do the buying and selling faster than a human being can possibly do it. We've talked about the basics of it here before at …
Front running is normally illegal and in most cases unethical but to blame HFT for it is naive because front-running existed long before even electronic trading was invented, let alone HFT.
Buses sometimes run over people but it would be stupid to say that it is their primary function and that buses should therefore be banned.
"Front running is normally illegal and in most cases unethical but to blame HFT for it is naive because front-running existed long before even electronic trading was invented, let alone HFT."
I blame HFT for it because the existing HFT systems invariably do it, just as I would blame any other trader who frontrunned day in and day out. If the FTC enforced the law and prevent HFTs from doing this, these HFT systems would still do very well due to their superior speed and data processing capabilities, but would be doing it fairly.
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