HFT/Algos on the CME, NASDAQ

This article borders on the histrionic, but since it quotes Eric Hunsader, of Nanex, someone who actually gathers and reads the data, I thought it is worth more than just binning immediately.

Robots Rattle Data Guru

The article left me wanting more. It raises many questions in my mind. Such as:

And, says Hunsader, the algorithm instantly buys or sells enough E-mini contracts to trade through the top three levels of the electronically displayed order book in about 50 milliseconds.

OK, so “through the top three levels of the … order book” means it bids up the price of the ES by 3 tics, or 0.75 of a point.
This create a better price for sellers of the ES, if that is their view. Thats how markets work, right? Thats OK, right?
50 milliseconds … being quick/efficient is OK, isnt it?
How does the algo then dispose of these (presumably) thousands of contracts just bought? Are they arbed into other instruments/markets? Any fungibility issues? Any margin issues if not fungible? (Algo/HFT shops are usually run on a small amount of capital only). Or are they just sold out and the book squared?

There are other examples of many questions raised in the article. Not a bad thing. Makes ya think …

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