A penny per share tax is a buck on a round lot trade of 100 shares to kill HFTs. The problem is I don't lose a buck to HFTs but I would lose a buck to the govt. Its just a cheesy stealth taxation plan. Blame the HFTs, rich people suck, horray for the 99% we're gonna destroy HFTs, but the only real end result is the govt takes more of my money. So a transaction tax is a great way to cause a couple orders of magnitude more damage to the economy than HFTs could theoretically ever cause.
Who's to say this money would go to the government? Don't exchanges need to pay huge amounts of money for infrastructure to support this activity? Also, isn't there a clear segregation between "normal" traffic and this high speed traffic?
This still doesn't explain the fixation on killing HFTs. So they get a "sin" tax. On what sin, exactly? nobody knows.
Because financial engineering has just been so beneficial to society... /s
WRT increasing transaction volume to make more than $1000... Remember that superman movie where Richard Pryor took all the fractional cents out of everyone paycheck, put them in a pile, and kept that substantial amount? Well HFT is like that in trades where a bunch of competing HFTs fight each other to, on long term average, determine the sub-cent price of a share priced in cents, and then, essentially, the HFT who skims off the least amount on top of the sub cent slice beats the greedier HFTs and keeps the extra skim. Well, in the movie, if Richard Pryor wanted more money, he'd have to make more transactions, make more paychecks. But Mr Pryor doesn't get to decide how many times paychecks are written per month (Weekly checks? Daily checks?), or how many people are employed... This tired old hollywood plot was recycled into Office Space, and probably many more movies. There's only like 50 movies, endlessly redone.
Ya ya ya, we all know the old skimming scheme that's become possible because of electronics controlling money. Just because there is a way to manipulate a system, doesn't make it a good thing. 21 is a good (blackjack)movie, but will still get you thrown out of a casino. There's nothing to say that these HFT's aren't skimming money from regular investors and vice-versa. That said though, why does the market exist in the first place? It's not for a bunch of machines to race to the penny.
Think about making a competitive system to determine the sub cent fractional price of shares traded at cent rounded prices. Read the wikipedia article below. You pretty much end up reinventing HFT.
Instead of sending me to a generic NP-Hard problem, I find this - http://en.wikipedia.org/wiki/High-frequency_trading#Effects far more interesting. Particularly the part where these machines submit orders and then instantly cancel them in order to find how high/low the market's machines are willing to go. I'm sure there is some very complicated algorithms(combination of networking and math) that go into finding the optimal way to beat others at this game...
I like the idea of a lot of competing HFTs from a lot of companies fighting each other in a race to the bottom to rip me off the least. Worst case is we damage the HFT ecosystem just enough that two companies get all the fractional skim and have no limits on greed because the government helpfully destroyed all the competition for them. Yes. That would be bad.
I do agree that the current competition scheme is better than an artificially created monopoly. I'm just confused why the HFT market needs to exist in the first place. Liquidity could come in from other ways(I believe). If not a tax(maybe not to the government) on only HFT, then why not a random delay (like say 10 second average)? Wouldn't that preserve the market while removing any possible gain that could be made this millisecond?
We (as a country) always make the worst possible decision, so this is probably what we'll implement.
Careful now, your republican is showing