September 17, 2010
To whom it may concern:
High Frequency Trading (HFT), Flash Trading and Dark Pools should all be outlawed. As a retired IT/Computer Network Engineer I invest my life long savings in what has now been converted into a computer based "arcade gaming studio" which now represents approximately 2/3 of the exchange volume.
The probability that multiple HFTers will use their algorithms simultaneously but without any connection, creating a flash crash is incredibly high. These traders do interact through their multiple frequent trades with totally unpredictable results as we have recently seen. The 'flash crash' will happen again and again.
HFTs do not provide liquidity nor serve any other purpose other than to secure pennies of profit by trading ahead of me and the rest of the retail markets while creating instability in those same markets. In the past all trades had to have a buyer/seller and a counterparty: That is no longer true as the markets are now rigged by computer base algorithms to the advantage of those who use them. The result is the kind of flash trash we saw recently.
I invest to preserve my cash and provide an income for myself and my family --- not to compete against a bunch of Wall Street MBAs who have figured out a way to distort the markets to their own advantage.
It would appear that the SEC's mandate is now corrupted toward politicizing its role to the disadvantage of retail and institutional traders.
The SEC should perform its job. It should outlaw all algorithmic trading for any purpose other than the exchange of securities based upon individual and institutional needs to foster the economy and more specifically to reward companies that make a contribution to the economy. As things stand now, we all know that the markets are being gamed solely for the benefit of Wall Street traders.
John L. Jacobs