High speed trading and horserace betting ?

[philcski]

Originally Posted by Benny

Read the following quote today on high speed trading and made me wonder what the difference is with the direct to tote computer groups doing this sort of thing in racing ? Not a trader myself. Thoughts.

" The long-running debate about high-frequency trading intensified on Monday, after bestselling author Michael Lewis published a new book, "Flash Boys: A Wall Street Revolt." The book contends that high-speed traders have rigged the stock market, profiting from trades made at a speed unavailable to ordinary investors.

Proponents of high-speed trading have criticized the book, saying high-speed traders actually benefit other investors by providing liquidity to the market".

http://finance.yahoo.com/news/sec-ne...191943259.html

No. If it were a fixed odds market, then yes, but in the parimutuel world it doesn't matter when the bet is placed. Now, if they have access to the pools after everyone else, thus affecting the final price, then it would have an impact.

Essentially the high speed traders were front running (which means using information from customer orders to trade your own account ahead of them), which is technically illegal but the way they were (and still are) accomplishing it, it's almost impossible to prosecute, since you're talking about latency of microseconds.