A Short History of Fast Times on Wall Street

[steven johnson]

High-frequency trading and flash orders enable some investors to extract a profit between the time a bid is made and offer is accepted, the same abuse of inside market information and access that the SEC has been trying to eliminate for decades. By renting space as close as possible to stock exchange computers as possible, high-frequency traders are said to pick up extra milliseconds of advantage.

There's an old saying: good businessmen borrow ideas, great businessmen steal them. It seems to be similarly true in trading equities.

MANY fear that new technology is giving some investors unfair access to stock market information. Supercomputers allow certain traders to profit by executing trades in milliseconds, a practice known as high-frequency trading. These traders also use a technique called flash orders that gives them a sneak peek at other investors’ orders to buy and sell stock. High-frequency traders are said to have made $21 billion in profit last year.

A Roosevelt administration official testifying in support of the 1934 legislation, Thomas Corcoran, described such floor traders as “chiselers.” This referred to their ability to quickly buy from sellers at prices lower than they would otherwise get, and promptly resell to buyers at prices higher than they would otherwise pay...

A Roosevelt administration official testifying in support of the 1934 legislation, Thomas Corcoran, described such floor traders as “chiselers.” This referred to their ability to quickly buy from sellers at prices lower than they would otherwise get, and promptly resell to buyers at prices higher than they would otherwise pay

In 1963 a congressionally mandated report on the securities markets found that floor trading conferred unfair advantages and should be abolished. Consequently the S.E.C. required that the major exchanges ban most floor trading, an exception being trading to contribute to “orderly” markets — that is, markets not subject to violent price fluctuations.

A Short History of Fast Times on Wall Street

[ixion]

1. "markets not subject to violent price fluctuations" you know, like commodities

oh wait... :eyes: