We'd have liquidity without this endless war on getting closer to zero. They are adding nothing and soaking up qualified grads who could be building something useful.
This is a great example of how the modern economy fails to link wealth created with wealth extracted.
That's true, but it's true of a lot of other things (for instance: huge fractions of all the devs working at Google and Facebook). Meanwhile, trading tech is (IMO) much more fun to work on than a lot of the work Googlers do, lucrative, and not concentrated in the Bay Area.
I'd rather we found a way to get everyone to work on drug discovery and civic engagement, but unfortunately, we don't generally put regulatory brakes on technologies simply because they attract developers that would otherwise be working on our pet issues.
We should put breaks on it because it's not creating wealth. If it's not creating wealth but people are becoming wealthy it's because money is being extracted via economic rent (due to monopoly).
When firms make lots of money from trading platforms and then pay staff who go and consume real resources that is ultimately coming by transferring from wealth producers.
The big exchanges are showing a little leg to the HFT players in exchange for kick-backs via fees.
EDIT: cannot reply due to HN rulz, hence inline...
The exchanges compete. The more asymmetric you make the platform for HFT vs the rest the more business you get.
Where would you trade? Somewhere you can win or not? Do I want a piece of that? I might let you know the incantations required if you pay me for the "service".
In theory other liquidity might move away but many ECNs have a very dominant position. For example NYSE.
What does this have to do with my comment, or your comment that preceded it?
You understand that exchanges compete with each other, right? The markets are now decentralized; there are like 15 different lit exchanges on which you can trade stocks.
This is a great example of how the modern economy fails to link wealth created with wealth extracted.