Post by dreamboatcruise on Apr 21, 2017 14:00:23 GMT -5
I can see the appeal in Bernie's platform but he's totally ignorant about markets.
Most high frequency trading is done to ensure that ETFs (and ETNs) reflect the price of their underlying assets. If someone makes money doing it they pay taxes on their profits just like anyone else. The idea of punishing people for doing something that's essential to the market makes no sense. If anything we should reward people for doing it. How would you like to overpay for a stock when the index it's in is crashing? How would you like to sell a stock too cheaply when the index it's in is rising?
It makes no more sense to tax HFT losses than it does it tax someone on their Mannkind losses. Many people who appreciated that Bernie wasn't pro-war, and owned by corporations like Hillary, wished that he could speak intelligently about financial issues.
Traditional market making firms have responsibility to provide the instantaneous liquidity in the market.
A significant component of what has been called "high frequency trading" has basically been front running orders to capture the better position for the high frequency trader, not some how providing a better price for those without all the equipment to shave milliseconds off order transmission time. So in the scenario bolded above, all stocks in the ETF would have downward pressure. If you place a market order for a single stock within the index, a high frequency trader would play it by having better connections to various markets. He'd discover the lowest price on any of the markets before your broker discovers it and then serve it up to you at a slightly higher price. Front running your order through the magic of cutting edge technology. I had business dealing with a tech firm that specialized in helping trading firms do exactly that.
Taxing losses doesn't make sense, but some other regulatory or industry solution might be useful.
Caveat: you and I may be using the term "high frequency trading" differently.