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I see a frequency-war ensuing; differing financial houses competing at ever-faster frequencies to pick up the edge, pushing the limits of predictive computational servers in a bandwidth war to rival Intel/AMD, and a whole new paradigm of the Financial equivalent of Moore's Law coming into play. |
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Why not auction the shares? The problem with high frequency trading, as the article describes, is that a fast computer gets the trade, rather than the best offer. Auctions allow no such cheating. You either make the best offer or someone else gets it. |
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Switching to an auction model or adding a time delay to each trade sounds like a great solution. I don't know the subtleties of stock exchange rules or economic theory and practice well enough to say. |
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The crux of my idea is that it's a cheap way to add fuel to the frequency war that already exists. This will reduce the time it takes for the practical-minded folks who set exchange policy to institute whichever rule makes the most sense. And then we can use all those supercomputer cycles to make decisions that serve a conceivable capitalist purpose. |
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