High-Frequency Traders Lobby, Donate to Head Off U.S. Rules

[Judi Lynn]

Source: Bloomberg

High-Frequency Traders Lobby, Donate to Head Off U.S. Rules
By Jesse Westbrook, Robert Schmidt and Frank Bass - Nov 9, 2010 5:00 AM CT

The high-frequency trading industry is stepping out of the shadows in Washington.

Closely held companies with undisclosed profits and obscure names like Getco LLC, Hard Eight Futures LLC and Quantlab Financial LLC, are beginning to act more like Wall Street banks, cutting checks to politicians, forming trade groups and hiring lobbyists and ex-regulators. They’re looking to fend off tighter rules and appease lawmakers who say the firms disadvantage small investors and contribute to wild swings in stock prices.

While the companies, which use high-powered computers to execute thousands of trades in milliseconds, aren’t approaching the big banks in Washington spending, they have more than quadrupled their political giving over the last four years, a Bloomberg News analysis shows. The top recipients include Eric Cantor, set to become House majority leader, and several incoming senators who won in last week’s Republican rout.

“They are under attack as an industry and they are fighting back,” said James Angel, a professor at Georgetown University’s business school who is on the board of Direct Edge Holdings LLC, which operates stock exchanges. “There is an old saying in Washington that if you are not at the table, you are on the table.”

In just over a decade, high-frequency trading has evolved from a little-known investment strategy practiced by mathematicians to a force that accounts for the majority of U.S. stock trades. The companies, which prefer to be called automated proprietary trading firms, say they benefit all investors by keeping markets liquid and transaction fees low.



Read more: http://www.bloomberg.com/news/2010-11-09/high-frequency-firms-accelerate-lobbying-donations-to-head-off-u-s-rules.html

[Robb]

1. I look forward to this. Sunshine will not treat them well.

They are roundly despised by most Americans, I think.

[JustABozoOnThisBus]

2. They are under attack as an industry?

This is an industry? What does it produce?

This is a manipulative scam. A small tax on stock sales would stop it.

[mbperrin]

4. You're right. It is a parasite on the system.

Stock sales per transaction would do it, all right. Let's see if we can get it.

[glinda]

3. K & R n/t

[bemildred]

5. Send them back to Las Vegas where they belong.

They can "trade" as fast as they like there.

[bemildred]

6. "High Frequency Trading" is sort of by definition not "Investment". nt

[xchrom]

7. How? How are they 'under attack'? Nt

[Crowman1979]

8. I guess they had to cut back on the nose candy in order to bribe--I mean lobby the government.

[jmowreader]

9. The HFT "industry" has one little problem

The whole fucking scam doesn't work if you can't front-run order flow, and front-running order flow is itself illegal. Therefore, HFT is illegal.