To: Frank A. Coluccio who wrote (39184 ) 9/17/2011 12:40:06 PM From: axial Read Replies (2) | Respond to HFT - Transaction Cost: Exhibit A Chart :CQS We think that a 10-fold increase in costs without any benefits would be considered "detrimental" by most business people. [Emphasis added, next paragraph] This explosion of quote traffic relative to its economic value is accelerating. Data for September 14, 2011 is the thicker red line that snakes near the high. There is simply no justification for the type of quote data that underlies this growth. Only the computers spamming these bogus quotes benefit when they successfully trick other computers or humans into revealing information, or executing trades. This is not progress. Progress is almost always accompanied by an increase in efficiencies. This is completely backwards . anyone who might say To my knowledge there's been no proof shown that high-frequency trading has been detrimental .", we'd like to submit this paper as Exhibit A. We think that a 10-fold increase in costs without any benefits would be considered "detrimental" by most business people. We think the regulators would agree with us as well. In fact, they already have on this very topic:Reg NMS Accordingly, one of the Commission's most important responsibilities is to preserve the integrity and affordability of the consolidated data stream. But in those limited contexts where the interests of long-term investors conflict with short-term trading strategies, the conflict cannot be reconciled by stating that the NMS should benefit all investors. In particular, failing to adopt a price protection rule because short-term trading strategies can be dependent on millisecond response times would be unreasonable in that it would elevate such strategies over the interests of millions of long-term investors – a result that would be directly contrary to the purposes of the Exchange Act .'nanex.net
