OK, so this is part 4 of my continuing rants in defence of HFT.
Once again, I have been reading an article from the guys at Themis trading, who are the most vocal critics (that I have found) of HFT. Today, though, I am happy to support the point they make in their article.
Is this a sudden change of heart from me? No, it isn’t. Past articles from the guys at Themis have mainly focused on the traders using HF trading, the attitude of the Themis guys has been illogical, irrational, and rich in sneering condescension towards a group of traders that just doing what traders do … using their best abilities to make profits. As long as a trader acts within the rules and law then I support him or her. HF traders might well be smarter and faster than you and I, but that’s not illegal, in fact its the basis of capitalism. Objecting to smarter, faster competitors is a Luddite attitude and it deserves to disappear into the footnotes of history, like the Luddites.
BUT – this article from Themis makes a reasonable point, objecting to the ability for other parties to track your/my orders, their modification, their cancellation and so on. I have said this before (and will, no doubt, say it again), but when you/I give an order to a broker there is an agency agreement in place (or should be) – the broker (be it human or electronic) must act in your/my best interests, and your/my best interests alone (within the bounds of the law, of course). Anything else is intolerable. I’ve also said before that the brokers have probably been given the right to disseminate order information in the broker-client agreement, i.e. by you/me … if this is so its time to rip up that agreement and find a broker that will only act in your/my best interests.
Kudos to the guys at Themis this time, don’t attack the HF traders (unless they are breaking laws), they are only doing what traders do, attack the institutional arrangements that allow brokers to disregard their obligations as agents for customers best interests.