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US Securities and Exchange Commission Chair Mary Jo White told a US House of Representatives panel that she flatly rejected claims that retail investors are being fleeced by high-frequency traders who can use their speed to jump ahead with buy and sell orders that fetch better prices. "The markets are not rigged," says White. "The U.S. markets are the strongest and most reliable in the world." White's comments to the House Financial Services Committee mark the first time she has directly responded to allegations in Michael Lewis' new book "Flash Boys: A Wall Street Revolt" that high-speed traders are engaged in a form of front-running, in which the firms are able to quickly identify an investor's desire to buy a stock, rush to buy it first and then sell it back at a higher price. The SEC has been reviewing equity market structure issues, particularly following the May 6, 2010 flash crash incident when the Dow Jones Industrial Average sharply plunged before quickly rebounding. Although staff at SEC are considering whether to launch some pilot studies to test different regulatory proposals, there are no immediate plans to issue rules to crack down on high-speed trading or trading in unlit markets. "I want to be very clear that the market metrics suggest that the retail investor is very well-served by the current market structure."
(Score: 3, Informative) by VLM on Wednesday April 30 2014, @02:33PM
What you're describing is called "arbitrage" and has been around since the dawn of civilization, at least since the SECOND marketplace was opened. Nothing directly to do with HFT.
The only thing that makes HFT special is making arbitrage a bit faster and more efficient than it was. Its actually a good thing to have a market wide single price. Assuming you have an actual use for your new asset or are investing at a value as opposed to speculating at a price, the smaller the spread in prices between markets, the less you inherently lose in the process of obtaining your assets.
An analogy you can play with gas stations is if you have to burn a gallon of gas to drive to a lower priced station, then price differences of $10/gallon during a hurricane would make it worthwhile, however in normal life a price difference of a couple cents due to the arbs makes life a lot easier, just fill up anywhere for roughly the same price. If you drive by 3 on the way to work, the price of arbitration is lower so you "force" the stations to price identically, more or less.
There is a non-geographic game you can play where not just the location but refining facilities have a impact WRT Brent crude oil (aka north sea by UK) or USA produced WTI crude. The refining costs are variable so you can arb across those refining costs in some cases depending on short term costs of refining. Crazy stuff, eh? 24kt gold or a generic commodity share of GOOG is much more boring in comparison to crude oil.
In your specific example, you could simply execute your trade directly in NYC if you wanted to avoid a middleman.
Arb trading is incredibly dangerous when volatility exists (which it often does). Picking up nickels from in front of the steamroller. You have to pick up an unholy number of pennies on a consistent basis to run a net profit when occasionally the market shifts locally and you lose entire dollars or more at a time. So that's why its not a popular activity, or its kinda white knuckle all the way anyway.