Check out the Graphic on the left first.
Stock Traders Find Speed Pays, in Milliseconds
In high-frequency trading, computers buy and sell stocks lightning fast. Some marketplaces, like Nasdaq, often offer such traders a peek at orders for 30 ms before they are shown to everyone else.
Former chairman of NASDAQ said on Bloomberg TV, high frequency trading makes up 73% of daily volume and is done by 2% of the market. Hmmmm. Goldman, SAC, Citadel and other major banks. This game is so completely rigged it's beyond belief. Although I am not "shocked" per se at this, but I am surprised it is so blatant with complicity from the exchanges. But then again, not surprised at the exchange's behavior considering all these extra trades equals revenue. A symbiotic relationship, and definitely a conflict of interest.
As I heard from someone, this pretty much dispels the myth that "program trading" is all about index arbitrage. And no doubt you will get Goldman alums adamantly denying that high-frequency trading is equivalent to front running trades. Yes, I get that front running usually involves your own brokerage. What this does is EFFECTIVELY allow Goldman to front run the entire market, but with smaller margins.
The same Goldman monkey will then say that anyone can pay the exchange and have access this data. But with the caveat that you need massive capex and expertise to build the systems you will colocate on the exchange, a quant team that you will be paying 8 figures to support, and bazillions of dollars in capital to trade with. That's of course you're assuming that you'll even be able to entice a quant nerd to work for you instead of Goldman.
Oh yea, did I mention, if you break off from Goldman to start your own shop, they will go after you and put you in jail?
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