In your discussion about high speed computer trading you stated, "The Securities and Exchange Commission has opened up an investigation into high-speed-trading practices, in particular the ability of some of the most powerful computers to jump to the head of the trading queue and -- in a fraction of a millisecond -- capture the evanescent trading spread before the rest of the market does" (Inquiry Stokes Unease Over Trading Firms That Shape Markets, New York Times, September 3, 2009: A1, A6).
We do we need an inquiry? The SEC needs to act. Even a millisecond advantage is front running. It is not clear whether or not this type of front running is illegal. If it is then practitioners should be prosecuted; if it is not then the practice should be banned.
I wonder how much of the recently declared profits in the financial services industry were based upon this practice.
Sent to New York Times