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Well yes, it puts some load on exchanges' computers, but it also
vastly improves liquidity and more to the point, tightens spreads,
possibly to the point of crowding out exchange members doing the same
thing at a more leisurely pace. A little bird tells me that tight
spreads aren't always in the interests of exchange members, so that's
where the real issue lies.
--- In realtraders@xxxxxxxxxxxxxxx, Mano Appapillai
<manoappapillai@xxxx> wrote:
> Here is the response from a person closer to the Exchanges : There
were some firms that where sending thousands of orders per second and
then cancel and replacing them with a slight move of the underlying.
They were essentially trying to act as market makers. This not only
ties up the resources of the exchange, but also of the brokerage
firms and ISVs. Just think of all the option classes and strike
prices they would constantly readjust and you can imagine the order
flow without any revenue generating trading occurring.
>
>
> Mano Appapillai
>
> 4565 Saddle Mountain Ct
>
> San Diego, CA 92130
>
> Tel : 858 794 8494
>
> "The only thing necessary for evil to triumph is for good men to do
nothing." - Edmund Burke (1729-97)
>
>
>
>
>
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