Hello Stephen,

Yes, a very strong case could be made that they are market manipulation. Exchanges globally are contemplating ways of dealing with these issues but nothing concrete has been done, yet.

These trades happen so unimaginably quickly and in such gigantic volumes and across so many platforms globally that to unwind just one example of manipulation can take weeks, and yet it is happening every day according to some HFT watchers.

One problem with an exchange changing their rules to make the market manipulation described above more difficult is that the HFTs account for so much of the volume and profit of the exchanges. So if an exchange implements rules to make it more difficult for HFTs to trade then they will just go elsewhere, taking their volume and fees elsewhere.

Remember the context, too, that the HFT firms do not care about the underlying asset, just the movement of prices, so they trade globally and simultaneously. So to stop the regime shopping exchanges globally must agree across the board to changes. As you know, consensus is very difficult.

My guess is that as soon as non-HFT traders, GUI-traders as HFT firms call them, wake up to the full magnitude of what is happening - hopefully not after a crisis - that they will demand action on the part of the exchanges.

Thanks for your question,

Jason