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The rise of trading quote spam

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Mary Altaffer/AP

(Read caption) A trader works on the floor of the New York Stock Exchange, in this June 2012 file photo in New York City. High-frequency quoting that has skyrocketed recently, leading some in the US to think it might be time for a financial non-transaction tax, like France implemented.

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On Monday, I posted a lovely animated gif from Nanex showing the rise of high-frequency trading. What I failed to mention is that graph doesn’t show completed trades. It shows quotes.

And according to another nice chart from Nanex, it’s high-frequency quoting that has skyrocketed, not trading.

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The number of unexecuted quotes, many allegedly not intended to be executed, has thus skyrocketed.

France recently took steps to try to deter the rise in quotes. In addition to a financial transactions tax it, France will also impose a tax on traders who submit too many unfilled quotes.

In short, France will levy a financial non-transaction tax.