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Special Order Type Exposure Hurting HFT Advantage

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The TABB Forum interviewed Haim Bodek today on the state of the current HFT advantage.  Surprisingly he believes that because of the exposure of order types that have been available to only a connected few, the bad HFT's we have focused upon so heavily are now a dying breed.  This "special order-type" is something he considers to be part of the market's asymmetry and order types have been a continual focus of his campaign.  The cries from public figures like him, Themis, Nanex, and Zerohedge have lead to a somewhat more transparent reporting of the types of orders available for high-speed traders.  

We all agree that not everything has to be simple.  Certain environments require complexity and usual strive to make it accessible on a human intellectual level.  Exchanges can not completely reverse what has happened since REG-ATS/NMS but what they are doing is making these "special-orders" available to the public.  Ingrained traders will surly spend sleepless night studying all the new ways to enter orders but this continues to handicap the heavily sought after retail Mom and Pops

The issue around the transparency of the order-types is a hot button issue because many in the anti-bad algo camp still believe that aside from exposing special order types, there is still more to correct in terms of regulatory oversight ability, market fragmentation, and overall protection for the less connected investing public who may just be trading after their 8-10 hour corporate workday.  Most of these folks get their info from the evening news and micro-structure complexity isn't something easily digested by any mass public therefore it is conceivable that they will still have no idea what they are trying to protect themselves from (internalizers, maker/taker rebates, queue positioning, etc) with all this new shit order-type information.

Market reform still has a ways to go but the turn around on special order types is welcomed and comes with a warning to the SEC to not sit back in front Brazzers for long as more work still needs to be done. 

 


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