> but haven't hard a good explanation about why the economy would suffer so much if the ultra high frequency trading just wouldn't exist.
The short explanation is that the speed is a tool for managing risk (like most other market tools) and by removing it, you remove that ability. That risk must be priced into the market somewhere and that will be in the spread that everyone pays.
Will that be worse than what we currently have? Who knows, but what we have is working pretty well with regard to providing liquidity (it is cheaper and easier to get in more markets than ever before and the margins are as low as they have ever been on providing it), so why mess with something that has so few down sides?
> Surely there must be worse things than stock market computer systems being confused?
There are, but Bloomberg doesn't specialize in them, and they don't garner nearly the HN upvotes.
The short explanation is that the speed is a tool for managing risk (like most other market tools) and by removing it, you remove that ability. That risk must be priced into the market somewhere and that will be in the spread that everyone pays.
Will that be worse than what we currently have? Who knows, but what we have is working pretty well with regard to providing liquidity (it is cheaper and easier to get in more markets than ever before and the margins are as low as they have ever been on providing it), so why mess with something that has so few down sides?
> Surely there must be worse things than stock market computer systems being confused?
There are, but Bloomberg doesn't specialize in them, and they don't garner nearly the HN upvotes.