> popular reporters want to turn HFT into a moral issue and paint HFT firms as evil manipulators, when they really aren't.
First, almost every issue is a moral issue, especially one dealing with the value of a certain endeavor (isn't that what ethics is about? Trying to find the value of things?).
Second, claiming that HFTs aren't evil is as much of an assertion as calling them bullshitters. Most "popular reporters" as you call them (I assume pejoratively) at least support their claim. They say that HFT has little social value, and then claim that putting so much effort into something of little social value is at least morally questionable.
It is claiming that this is not a moral issue that is the more powerful moral assertion here, and quite suspect, at that. Whatever economic risks HFT may entail, its mere existence is first and foremost a problem of ethics.
Much of HFT does have little social value. We could eliminate much of the worst of it by allowing subpenny trading, so trading firms could compete on price instead of on latency.
Maybe you think "sub-pennies? that's just a different kind of insanity." But remember that we're talking per share pricing. So imagine every transaction of every share ever being wrong by an average of half a penny. Imagine you could compete for the money represented by that error, and you could win it, just by having the fastest computers which put in the orders first. Behold: Wall Street as you know it.
I agree that we could and should treat it as a moral issue, and that avoiding those questions is often a sign that something immoral is going on.
But we can also look at it as a system design question: if we're trying to build an efficient, robust marketplace, what activity do we permit and forbid? What do we encourage and discourage?
Having worked for market-makers, I get the value of liquidity. It's not at all clear that HFT firms actually provide liquidity [1], but even if they did, we'd want to ask, "What is the cost of different sorts of liquidity provided, and which ones do we choose to maximize the value of the market to participants and society as a whole?" So far I haven't seen any evidence that HFT activity isn't purely parasitic. In which case it's reasonable to ask whether we should still reward it.
First, almost every issue is a moral issue, especially one dealing with the value of a certain endeavor (isn't that what ethics is about? Trying to find the value of things?).
Second, claiming that HFTs aren't evil is as much of an assertion as calling them bullshitters. Most "popular reporters" as you call them (I assume pejoratively) at least support their claim. They say that HFT has little social value, and then claim that putting so much effort into something of little social value is at least morally questionable.
It is claiming that this is not a moral issue that is the more powerful moral assertion here, and quite suspect, at that. Whatever economic risks HFT may entail, its mere existence is first and foremost a problem of ethics.