Goldman's Defense Of HFT To The SEC

In a leaked document of Goldman's internal defense of various trading practices including HFT and dark pools, before the SEC, the dominant force out of 85 Broad provides a very good if biased overview of virtually all issues that the SEC is currently evaluating and looking to address per the proddings from senator Kaufman.

The full document is presented below. What is interesting is that while Goldman makes token concessions about certain aspects of market topology, it is virtually adamant in its "do not touch" stance on precisely those components in which it is becoming a practical monopoly power.


One thing to note, which refutes much of the claims that HFT dominance has lowered trading costs, the argument at the core of Goldman's position, is that if one were to superimpose the VIX with the latest Implementation Shortfall data out of ITG, what is obvious is that even as market volatility has declined, the rise of the machines (best seen here) has not reduceed IS, and in fact trading costs have continued to creep higher over the past 3 years. We would be curious to hear Goldman's explanation of this particular phenomenon.