December 13, 2010
Comment on Concept Release on Equity Market Structure
While it is difficult to deny the positive contribution HFT has had on liquidity and market efficiency, something should be done to prevent HFT from submitting copious amounts of fake liquidity to the market (i.e. orders that are cancelled within seconds and even milliseconds of being submitted). In my opinion, this rapid turnaround and cancellation of orders provides little benefit to market liquidity and ultimately harms the retail investor.
I believe a minimum time requirement on the duration of orders should be placed on all actively traded stocks and ETFs. A minimum time requirement of anywhere between 1 and 2 seconds would restrict HFT from unethically benefiting from their speed and location advantages while still allowing retail investors access to legitimate liquidity. A minimum time requirement would also make quoted prices more informative of the underlying instruments fundamental value, ultimately, increasing market efficiency.