With the help of new hire Ronan Ryan, [Brad] Katsuyama[, former head trader in New York for the Royal Bank of Canada], realized that his orders traveled along fiber optic lines and hit the closest exchange first, where high frequency traders would get a glimpse, and then use their speed advantage to beat him to the other 12 U.S. public exchanges and 45 private trading venues. HFT algorithms could then buy the shares Katsuyama wanted, and then sell them to him at a slightly higher price.
That's the definition of front-running, and it was hitting large institutional traders, of whom investment and retirement funds are a significant portion -- that's stealing from you and me, friend.
http://www.reuters.com/article/2014/03/31/us-markets-hft-fla...
With the help of new hire Ronan Ryan, [Brad] Katsuyama[, former head trader in New York for the Royal Bank of Canada], realized that his orders traveled along fiber optic lines and hit the closest exchange first, where high frequency traders would get a glimpse, and then use their speed advantage to beat him to the other 12 U.S. public exchanges and 45 private trading venues. HFT algorithms could then buy the shares Katsuyama wanted, and then sell them to him at a slightly higher price.
That's the definition of front-running, and it was hitting large institutional traders, of whom investment and retirement funds are a significant portion -- that's stealing from you and me, friend.