Stock exchanges once were operated as not-for-profit public utilities, managing the listing and trading of companies in the public marketplace. Today, they have morphed into rent-seeking, publicly traded companies in the zero-sum game of executing orders.

Where once there were many winners, now there are distinct winners and losers. High-frequency, algo-driven traders -- and the exchanges that now exist to serve them -- are the winners; everyone else is a loser.

 

 

 

David Fuller's view

This is an excellent article by Barry Ritholtz; he knows what he is talking about.  HFT is predatory front running and should be blocked by the two sensible measures in the penultimate paragraph of this article:

I have a simpler solution: Quotes must last at least one second, a lifetime in the world of HFT, and a fee of 0.01 cent would apply to any order, filled or not. That would curb the abusive practices. In the meantime, it's heartening to see a market solution.

Exchange officials and regulators should be shamed into adopting these measures without further delay. 

HFT is an unethical tax on every investor.  Those most at risk are leveraged traders because HFT has greatly increased intraday volatility. 

(Use this site’s Search facility for more on this subject.  Search under HFT, high-frequency and high frequency, for the many articles and comments posted over a number of years.)