Hard Times For HFT

Yesterday we wrote about how the HFT community has begun to lobby to eliminate the Order Protection Rule.   It’s no surprise to us that they are trying to change the rules now since their cash machine, which unofficially began in 2007 (with the implementation of Reg NMS), seems to be grinding to a halt. After squeezing every last arbitrage (latency, regulatory, rebate) penny out of Reg NMS for the past 10 years, the HFT community now wants new rules so they can create new arbitrage opportunities. So why now?  Why do they all of the sudden care about the ten year old order protection rule and locked/crossed markets?  Like most issues the answer always comes down to money.

The WSJ just published an article titled “High Frequency Traders Fall on Hard Times” where they examined the profitability of HFT firms.  According to the WSJ, “revenues at HFT firms from U.S. equities trading were an estimated $1.1 billion last year, down from $7.2 billion in 2009.”

Link: Hard Times For HFT