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The Proposal That Has Dark Pools Sweating; The Dark Pool Vs. HFT Scramble Is About To Enter Round Two
Dark pool operators, who have quietly been redirecting shady order flow via dark pools of "liquidity" with minimal supervision and below the radar for many years, are getting spooked by a proposed SEC rule which would have these same dark pools identifying their trades in real time, thus removing the benefits associated with what is effectively an OTC equities market (yet one to which an ever-increasing order flow, by some estimates up to 25% of all share transaction, are covertly being rerouted).
Amusingly, Goldman Sachs takes upon itself to voice what the "consensual" opinion of the buyside is, even though the firm is, at least on the surface, a sell-side organization:
"There's significant reservation from the buyside about symbol-specific
real-time reporting," said Dave Johnsen, head of equities business
development at Goldman Sachs Electronic Trading. "It's not welcome by
long-term investors." Goldman operates the Sigma X dark pool, which is
the industry's second-largest.
Are these the same investors, of which, according to Tabb, 50%+ find nothing wrong whatsoever with High Frequency Trading as well? My, my: between finding no flaws with the HFT front-running brigade (we will discuss another issue: Sub-Pennying, shortly - a totally different way you are getting scammed and didn't know it) and with the insider trading Dark Pool syndicate, the buyside community is really dying to keep getting ripped and raped by exchanges/ATS/dealers. At this rate hedge funds will need to charge 5 and 50 just to cover their transaction costs (as market neutral funds have recently come to discover).
More details on the proposal that has Goldman's Sigma X henchmen sweating and making pretty presentations for the confused SEC drones, courtesy of Traders Magazine:
The SEC in mid-November proposed several rule changes that would
affect dark pools. One proposal would require dark pool trades to be
attributed in real time to the dark pool where they occurred. All dark
pool trades already print to the consolidated tape in real time, but
they are identified simply as over-the-counter trades.
Under
this proposal, all dark pools would have to identify their trades,
unless those trades have a market value of at least $200,000. The SEC
recommended this exception to its proposed post-trade reporting rule to
avoid hurting institutions that are working big orders.
"Our
clients have said that it could introduce potential inconvenience
without material benefit," Johnsen noted. "These investors aren't
saying, 'I'd prefer symbol-specific volume from each dark pool rather
than pool-level information."
Of course, if Johnsen had his way pool-level, and in fac any-level information would be completely curtailed. After all any information leakage from Sigma X could only potentially go to make money for such HFT platforms as... the Supplementary Liquidity Provider NYSE initiative. Which is still thoroughly monopolized by Goldman. Then again, Mr. Johnsen has nothing against monopolies either. And lo and behold: Johnsen read our minds -
In his view, certain high-frequency trading shops could benefit more
from that information than traditional buyside firms, since the former
tend to be more reliant on market data to fuel their strategies. "It
could empower that segment of the market more than longer-term
investors," Johnsen said.
Why not just trade all equities OTC with no reporting responsibilities? Morgan Stanley seems to be a fan of that idea:
Morgan Stanley also thinks real-time attribution would affect the
ability of institutions to trade quietly in dark pools. "Real-time
attribution to a dark pool would impact volume in dark pools," said
Andrew Silverman, global co-head of electronic trading at the
broker-dealer. "Long-onlies would be less likely to put orders into
dark pools," because of information leakage concerns. Morgan Stanley
operates two dark pools.
Cause the last thing anyone would want is for long-onlies to trade on the same venue as everyone else, and be subject to the same limitations. Ah, but then how would Goldman and MS earn their "premium" fees. Yet wasn't Sergey Aleynikov a part of the Goldman algo brigade? Surely he would disagree with Goldman's Johnsen... if he didn't have a gag order of course.
Which brings up an interesting point: all the HFTs out there claim they have the most legit, innocent and altruistic intentions when they let lose a bunch of predatory algos to rip, steal and frontrun the crap out of the "long-onlies." Yet the dark pool guys are saying they need to exist because of the dangers of high frequency trading... So who is lying? The simplest resolution to it all is, once again, to do away with the adverse selection characteristics of HFT (and HFT in total if need be), and to move all dark pool operations to open exchanges, so that the market will no longer be multi-tiered to the point where one's head spins in trying to make sense of just how many different ways one is being robbed.
That way those so highly valued "long-onlies" won't suffer, poor things.
Some more on this, from Kevin Cronin, head of equity trading at Invesco:
"Real-time information about where dark pool prints take
place would harm institutions. Identifying the source of dark pool
prints will benefit high-frequency traders. That
absolutely is not good from an institutional perspective," he said."
But wait, wait, wait: didn't Invesco presumably among most others, claim that HFT is benign and in fact good for the future of humanity? It appears not:
"As more blocks are traded in algorithms, there is the potential for
more information leakage with real-time, venue-specific reporting of
smaller trades. People can see the small trades and try to
figure out whether there's an aggressive buyer or seller in a
particular venue."
Hm... Something definitely is fishy here. We would suggest that Senator Kaufman have a nice little prisoners' dilemma experiment: in one room stick Dave Johnsen of Goldman, and in other have Jim Simons (quick, 20 more day and he retires). Then do a good cop/bad cop routine until one rats out the other. Then ban both.
Of course, in a market so terminally broken as our currently is, getting rid of dark pools or HFT exclusively, will do nothing but make the adversary stronger. Which is why we sure hope that the SEC's regulatory overhaul of market structure is proceeding well (and hopefully not 10 years behind plan already), because at the end of the day nothing short of a revolutionary change in the way any given block of shares is traded (and front run by Mr. Johnsen's very own colleagues over at the NYSE' SLP division), will get the retail investor, pardon, speculator, back in this corrupt and manipulated market.
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"Someone is lying."
Just some "one"? Why can't they all be lying?
Oh, maybe that was your point.
Never mind!
Lets move pass the Lies, What matters to me is the Truth. by † h i n k f i s hon Sat, 12/12/2009 - 12:10
#161367
I'm fishing in these dark pools for Answers to my Question's...
Regarding Buying Halt For Health Science Group (HESG.PK) Last Trade .0007
I would like to address these questions to the following two CEO Executives...
Mr. Thomas Gaffney, CEO of Health Science Group,
Mr. Roger O. Riney Chief Executive Officer of Scottrade and currently President of Knight Trading Group. If You Gentlemen would be so kind as to enlighten account and HESG shareholders by answering the following questions.
The Q's Do you believe there to be Moral Hazard or Conflicts of Interest, effecting those HESG shareholders with or without brokerage accounts at Scottrade? What are the discrepancy that have caused a buying Halt for many of Health Science Group Investors.? Most Retail Brokerages have no buying halts on HESG stock, except for Scottrade and TD Ameritrade where a buying halt has been placed for HESG.
These are questions directed to Knight Capital Group, who are currently the Largest Market Maker's for HESG equities. "Knight provides trade executions by offering to buy securities from, or sell securities to, institutions and broker dealers". In the current Holding Reports, it states that Knight Capital Group has no direct holdings in HESG equities..... Therefore HESG shares must be borrowed or bought from other brokerages like Scottrade. My question is regarding the HESG shares that are bought and borrowed by NITE, while Scottrade account holders are still faced with a buying halt. Are any of these shares then used for shorting the same shares they have just borrowed from? Mr. Riney not to include yourself; But how do you decide which best interest comes first, the CEO of Scottrade or President KNIGHT TRADING GROUP? Now I'd like to thank you gentlemen, ahead of time from all the HESG Investors for attempting to make these issues more transparent and fair for us all.
May We Find Good Luck, & Peace...
God Bless.
I.C.Stockwell aka † h i n k f i s h
KNIGHT CAPITAL GROUP, INC.
FORM 13F-HR
(Form 13F Holdings Report)
Filed 11/13/09 for the Period Ending 09/30/09
http://idc.api.edgar-online.com/efx_dll/edgarpro.dll?FetchFilingConvPDF1...
Thanks For Your Comments
Huntinvest.com Securities and Investment Forums Respond
I doubt of any officers of Health Science Group (HSEG) or anyone with an IQ
above Chicagos' temperature (18º) follow this crap ($0.0007/sh.) in this
N/G....
What is this statement supposed to mean <<Do you believe there to be Moral
Hazard or Conflicts of Interest, effecting those HESG shareholders with or
without brokerage accounts at Scottrade?>>
Even if you have a million shares, you're talking about $700.......
Why don't you just sell this dog, take your tax loss, go to Atlantic City
put it the proceeds on the "00" to end your misery........
Questions Regarding Buying Halt For HESG/Health Sc...Blash12-11-2009
I've been reading ZH for about 6 months now. every day. incl. the credit articles where I do not understand most terms and concepts. Equities on the other had are a bit different. I guess you could call me a bit of a high frequency trader.
What I would like to say is that ZH has thus far failed to actually explain to me, how dark pools (as a concept) hurt investors. Please show us you are not just a credit expert who likes to assume/proclaim dark pools are evil just because they exist. Not that I deserve such honor - perhaps there's a link to a wiki article that does so? or some other samaritarian reader could do as much? PLEASE!!! I deplore you!!!
I "deplore" you!!!
I suspect you meant to say I 'implore' you
de·plore
(d-plôr, -plr)
tr.v. de·plored, de·plor·ing, de·plores1. To feel or express strong disapproval of; condemn: "Somehow we had to master events, not simply deplore them" (Henry A. Kissinger). 2. To express sorrow or grief over. 3. To regret; bemoan. http://www.thefreedictionary.com/deplore
Dark pools hide transparency. Market is supposed to be legit and not deceptive. The shady operations that occur everyday have led to the public wanting a more transparent place to invest.
The NYSE and Nasdaq make a big deal about being THE meeting place for buyers and sellers. Both exchanges take great pride in the liquidity that they offer a buyer or seller. This liquidity is a major component to true price discovery. Anything that would taint true price discovery is not beneficial to a market exchange. So, you see, OTC action cuts into this liquidity, thereby cutting into the efficiency and effectiveness of true price discovery. Not only are the dark pool operators potentially hurt, but everyone else on the exchange is hurt because, again, the exchange boasts the greatest number of buyers and sellers. What is particularly galling is that the dark pool operators are the biggest seats on the exchange. So, these big operators are being disingenuous, which is a nice way to say that they are lying their ass off.
Based on my experience working on various dark pools, I consider these to be the issues.
This article states that trades on dark pools are reported in real time as OTC trades. Orders on dark pools are not reported publicly. This is advantageous to a party that submits a very large order to avoid moving the market. If a 100,000 share sell order was publicized, buyers would lower their bid price substantially. The seller would execute the 100,000 share order over a long period of time in 100-200 share increments. This adds to the cost of executing the trade in various commissions. One large trade is cheaper to execute.
Dark pools trades are required to execute within the Best Bid and Offer of the "light" markets. The intent is that the dark pools at the current fair value.
This model would work well if the dark pools were a small fraction of trading volume. The "light" markets would fairly determine trading prices.
In reality, the fragmentation of dark pools means that HFT's do much pinging. They submit orders to dark pools followed by an immediate cancel to make inferences about dark pool activity.
If this scenario develops into a small fraction of trading being done on the "light" market, then manipulation of the BBO used by the dark pools would be more prevalent.
So there is a reasonable case for dark pools based on efficiency. Wall St. favors unregulated trading that they can manipulate. Suspicion of any Wall St. "innovation" is justified.
great points Anon.
bottom line: dark pools are a basic necessity. period. complexly woven practical nuances are an entirely diffrent convo.
two quick examples.
1) FIDO needs to buy / sell x million shares of xyz ... they canNOT just do so w/o repercussion, so they contract terms with another party.
2) ever notice umpteen hundred thousand shares of SPY hit the tape at THE last second of the cash ... OR ... ever see those 1258 + 759 + 544 etc. etc. sized ES (S&P futures) sell orders hit the tape at / within a minute of the cash close ???
size like this canNOT, ever, be done "naturally" and by its very nature must be done as an arranged trade that "hits the tape" when cleared.
again, just like HFT ... there are many rather ESSENTIAL, rather CRITICAL functions of dark pools, which are just "things that retail doesn't like n can't ever understand."
How long have dark pools been around? Did Peter Lynch use them to move Magellan in the "olden" days? One of the only advantages to being a mammal scampering around the feet of the dinosaurs is that we can be nimble. Grab a scrap and scoot back under a rock. With the dark pools and HFT, the dinosaurs now are equipped with hunter-killer drone wasps and high tech battlespace processors that scorch the earth and collect the singed mammal bodies. To switch metaphors--and maybe I'm hopelessly old-fashioned--but if we're playing the same game, shouldn't we be playing by the same rules? If your helmet as a device that allows you to view a 95 mph fastball as if it were an Eepheus pitch and if your bat is a special lightweight polymer that can "bunt" a ball 500 ft., well that's not quite fair.
The big guys have always had superior intel, pro traders, and the best computer systems that money can buy. Now they have all that, plus the ability to move much more like a little guy. And the GS's of the world make money going and coming.
It's hard to figure why so many of us are watching this market in awe of its incongruousness.
Excellent.HFT and dark pools as used today should be banned.They make 3 card monte too easy.
I have a dark pool in my wc.
Dark pools dont support transparency. Wallstreet is so shady we demand transparency. Cnbc reported this morning a poll was take and 1 out of 10 people trust wallstreet, my first thought was who is that 1 idiot. Here is a good scam. My firm clears through Goldman Sachs and they told us we cant put in sub penny prices to front run the HFTraders that are front running our orders all day. The owner of my firm had his compliance officer research and she found out it is not illegal for us to do this. He then approached Goldman with the findings and they changed their position and said that it is against Goldmans policy. Like it is against their policy to let us enter quantities of less than 100 shares or hidden orders because their programs to front run us cant see them. Here read this site and sign the petition if you agree with it. http://www.defendtrading.com/subpennying.html
overbet,
Thanks for the link. Enjoyed the story, too.
Dark pools are "house trades" on steroids. I used to work for a firm that voluntarily stopped the practice of house trades when other firms continued. Those eventually became illegal.
There is a reason for hiding large volume trading (to protect the price) but the truth is that should be the penalty for institutional buying. We don't have a separate market for HFT or large orders (dark pools) -- it is all one market. GS and others don't want individual investors piggy-backing but is the price of HFT and dark pools (especially where it can be used to manipulate the market or make it opaque) really worth the price to the market as a whole?
You were fired right?
hahahaha ... nope, I wasn't fired.
But I am about to be from my current job because I don't drink the koolaid.
We're all born into the lie, starting with Santa Claus and the Tooth Fairy.
Hehehe....I have used that last one. Good one...
Actually....how about this....
Instead of a new transaction tax.....why not a new ecn....
called GOVT....
Evergreen $ to the govt....and would also require the elimination of all off exchange order matching...
All in the open on this singular world wide exchange....
All securities....
And no taxes of any kind....
And very retail oriented....
Millions of confused small accounts are better than a handful of similar exit door players....
Why not ?
Ok - you got me - i suppose it is now unmistakeably apparent that English is my 4th language (and Java is my 8th).
Still - can someone show me a mathematical example how some buy-and-hold investor gets hurt by a dark pool transaction taking place that same trading day - i promise to give you 40%?!!!!
Btw, did anyone else conclude reading that one "Obama sellout" article, that the whole health care push was just to provide cover for the lack of true wall street reformation - is the whole dark pool hysteria just another such thing?
ps. please do not be tempted to reply in Russian - i forgot cyrilic alphabet long ago, and never learned Russian in the 1st place.
Everybody out of the pool, game's fixed. I am personally long beer and saving the cans in my basement. (See, I did learn something from that Weimar story).
DO the dark pools trade through the best bid best offer on the public exchanges in real time? Is that the problem? Or am I following the wrong argument?
no. they do not trade through the NBBO. this proposal aims to make it so that when SigmaX prints trades to the tape, they print as SIGMAX instead of as OTC (or generic third market). i don't get the point of it, though, if trades over $200k notional are exempted.
You are wrong on two counts: NBBO loopholes exist and real traders are very much aware of them.
1) Google "Qualified contingent order" - feel free to check the consolidate tape for examples...
2) Currently per Reg NMS displayed liquidity is not protected over non displayed- dark pools take advantage of this all the time. Offered liquidity bid or offer side can be bypassed. This is one of the major changes currently contemplated for Reg NMS and could serve as a whole new Reg NMS proposal. From a prior post:
whoa whoa. hold up. I am fully aware that if the market is 10.00-10.01, then stock can trade in SIGMA-X at $10.00 without clearing the displayed quote. That's NOT trading through the NBBO. Although, in fact, the dark pool operators have been "discouraged" from doing this, i'm certain that it does happen, but it's not trading through, and has nothing to do with dark pools/transparency/manipulation - it's a function (a drawback) of fragmented markets. Similarly, you can hit a $10 bid in ARCA and the $10bid in REDI might not get filled.
Stock CANNOT trade at $9.99 without clearing the $10.00 displayed bid. That is what is most important
but anyway, TD - can you answer my question about why this proposed change would have dark pools "sweating" if it exempts trades over $200k?!?!!? aren't they (the big trades) the ones that matter? honestly - i don't get it - it seems like more toothless symbolic legislation.
TD can't. Bottom line this is a hoo ha without a cause- there has ALWAYS been a dark market and always will be one--the breakdown is 1/3 to 2/3 going back like 5 decades. Do your homework.
TD et al get this considerable and complex crap over the transom and to their credit they put out mostly good stuff (hey we are all humans--tail error and all that).
On this one they are out on the edge if not lunch. Kaufman is not "all knowing" and they are out to lunch on coddling this guy..
--A 100 plus for trying tho-
Tyler,
If you are seeing trades that clearly are ignoring either side of the NBBO on the tape, why don't you post a few examples?
I am skeptical that it happens outside of erroneously placed (i.e. you could have gotten a better price) intermarket-sweep orders, and even then - it is quite hard to read the tape and understand the order of operations since time on the scale of a fast machine doing ISO orders on multiple ECNs is relativistic and certainly not captured with enough granularity in the tape.
1000+ he can't.
The point is what about that trader that is risking money providing liquidity and then he doesnt get the fill he had been waiting for, sometimes for hours. Whats going to happen to the markets when all of the HFT and dark pools front running fill thieves drive the true liquidity providers out of the market. You want chaos cause thats what you will get. You want -800 dow points in a day?
Great question. Several examples to be provided shortly, either here or in more regulatory venues.
What a stud-
Yamada is talking about NYSE having less than 20% of total volume with more than 70% off exchange. About at 6:00+ on the podcast. Ned
http://media.bloomberg.com/bb/avfile/News/Surveillance/vOwnp_xGIqjg.mp3
"Under this proposal, all dark pools would have to identify their trades, unless those trades have a market value of at least $200,000."
i don't get it - what's the point - only odd lots would have location attributed on the tape? why would anyone care? in other words, the big trades would still be exempt from location reporting (reminder - as TD points out in the article, all dark pool trades are ALREADY subject to timely reporting)
I'm fishing these Dark Pools for Answers to my Questions ...
Regarding Buying Halt For HESG/Health Science Group
I would like to address these questions to the following Executives Mr. Thomas Gaffney, CEO of Health Science Group and Mr. Roger O.Riney Chief Executive Officer of Scottrade and Currently President of Knight Trading Group. If You Gentlemen would be so kind as to enlighten account and shareholders by answering the following questions.
The Q's
Do you believe there to be Moral Hazard or Conflicts of Interest, effecting those HESG shareholders with or without brokerage accounts at Scottrade? What are the discrepancy that have caused a buying Halt for many of Health Science Group Investors.?
These are questions directed to Knight Capital Group, who are currently the Largest Market Maker's for HESG equities. Knight provides trade executions by offering to buy securities from, or sell securities to, institutions and broker dealers. In the most current Holding Reports, it states that Knight Capital Group has no direct holdings in HESG equities.....
Therefore HESG shares must be borrowed or bought from other brokerages like Scottrade.
My question is regarding the HESG shares that are bought and borrowed by NITE, while Scottrade account holders are still faced with a buying halt. Are some of these shares then used for shorting the same shares they have just borrowed from?
I'd Like To Thank You Gentlemen, Ahead of Time..... From All HESG Shareholders.
May We Find Good Luck, & Peace.
God Bless.
I.C.Stockwell
aka † h i n k f i s h
So all they would have to do is deregister as USA corporation and register somewhere else. Say Dubai. Problem solved... SEC can't do anything then.
Some HFT provides liquidity, some HFT is just plain criminal, frontrunning large orders. So be careful not to paint the entire industry with the same brush.
i think we are all talking apples and avocados.
if i am not mistaken, i can think of at least 3 fundamentally different types of dark(ish) markets:
1. light venues that accent hidden orders and match all (e.g. all ecns and exchanges)
2. continuous match dark venues which hold unmatched priceless orders and match them at nbbo as soon as they receive a counter side - is this how sigmax works?
3. crossing networks which receive and hold priceless orders and cross them at nbbo say 3, 4, 5 times a day - is this how posit works?
thus far i can recall seeing these issues with dark venues:
a) lack of (timely) trade reporting
b) lack of reward for the effort/risk to those, whose orders on light venues, form the nbbo
c) hft and various evildoer manipulation of light-dark order flow
i think #a is very easy to fix; i do not really believe #c and i think that #b is a small price to pay in order to offer a greater good to those (investors) who need to trade in size.
since i do not trade in size and have no experience with it, i'll make some guesses and you folks please correct me.
let's say i wanna sell 1M shares in a fairly thin stock - if i hit all the bids on arca/inet/bats/edgx/nyse, 100 shares at a time, pretty soon i will impact the price (of my own executions). i will also IMPLY to everyone and their mother that all this trading was on the bid. therefore, everyone will assume that the price should indeed go lower and since price movement == volatility, i have just created it.
unbeknown to me, some other investor was about to buy 1M shares of the same thinly traded stock and was gonna start paying all the arca/inet/bats/edgx/nyse offers as soon as she was finished reading some ZH article. except, all of a sudden she sees all the action/volatility i have just created, and she changes her mind - or not. perhaps she does as she originally intended, thereby pushing the price back >> is this more volatility? what about that small retail investor whose 200 share order got caught in all our cross fire? or the 200 small retail investors whose orders got caught in the cross fire?
anyway, if i was able to submit my order to posit instead, and "meet" my fellow ZH reader as a counter party in the dark, would't we all be better off? no price impact to me or my fellow ZH reader; less volatility; fewer collateral victims; no bid/offer side trading IMPLICATIONS just because she was reading ZH and did not accidentally enter her order before i did.
where am i mistaken? also, should i have written in a more theatrical style in order to get more attention (from all the unsuspecting public whose page views support my living)?
in order to get the attention of the "unsuspecting public" you might try and tone down your patronizing view of said public.
"At this rate hedge funds will need to charge 5 and 50 just to cover their transaction costs (as market neutral funds have recently come to discover)."
This part of the original commentary makes no sense.
High management fees do nothing to "cover their transaction costs...," as transaction costs are trading costs of the hedge fund itself.
Likewise, incentive fees are charged on any net profits *after* transaction costs and all other trading costs.
Most of the problems that TD has with HFT can be tracked back to extremely short limit order lifespans. It very much appears that the sentiment from ZH is that the predatory HFT traders are abusing the system by canceling countless orders very rapidly to manipulate other trading participants and/or use some sort of electronic front-running enabled by far-smaller message latency (let's call these types of techniques "predatory HFT").
Every "interaction" with an electronic exchange (orders or order cancellations) that is placed has associated costs, although each interaction cost is miniscule. However, these costs, collectively, do add up to a reasonably large amount of money. These costs are borne by all participants, but the participants who generate the most "interactions" with the exchange don't, by a country mile, pay their fair share.
Consider a HFT firm with a super-low-latency co-located setup and a *predatory* strategy based on placing millions of orders a day, of which, for example, about 0.0001% are actually executed. All other non-predatory HFT participants are not only being potentially "hurt" by such a strategy (remember, we defined it as predatory) directly, but the costs of running the exchange are unfairly apportioned away from the predatory HFT firm. Not only that, but there very significant costs to all firms from the much larger quote data messaging volume that occurs for every single order that is ever placed, regardless if it gets filled or not.
All other firms are processing quote updates and very potentially reacting (sometimes to their own detriment and to the advantage of the predator) to the numerous orders which are being placed and almost instantaneously cancelled.
If the most predatory HFT is characterized by a super-low execution rate (almost all orders are not executed), then the obvious answer is for the exchange to charge a very, very small charge on each order, one that roughly approximated the costs imposed on all participants and the exchange itself, of actually placing an order. This fee would be a very small fraction of the rebates which exchanges pay for executed limit orders, so providers of liquidity would still "earn" their rebate, when they actually provide "real" liquidity.
Properly calibrated, this charge would be set to a very fair level, and would discourage the very most hyperactive styles of HFT. If those same hyperactive styles are generally predatory in nature, and there is a lot of evidence that this is the case, everybody but the predators would benefit.
I sincerely hope that most HFT is not predatory, and is, in fact, high frequency market making or related to honest trading styles, which benefits all market participants by providing, in aggregate, much lower transactions costs for all.
The natural evolution of a very competitive electronic trading landscape should result in market makers who continue to provide very valuable liquidity to the rest of the participants.
Obviously the lines get blurred, and market makers who combine predatory HFT with pure market-making are going to cry foul, but the more that they are encouraged by the parameters of the trading landscape to provide honest liquidity, the better off we all are, especially in the long run.
My general take on TD's opinion of the HFT landscape is that it is virtually all predatory, but I would very much encourage TD to consider limiting his venting towards predatory HFT.