Just read story about Michael Lewis' expose of HFT in his new book Flash Boys. Interesting how times change but some things remain the same. Such as stock brokers gaming investors for their own gain via front-running or in this case high frequency trading. From what I can gather on the subject, traders use very fast computers to trade thousands of trade per second to reap a fraction of cents on each trade. The brokerages even put their computers as close to the exchange as possible to gain and edge. They even try to get the fastest methods to communicate futures prices from Chicago exchanges to the New York exchanges via line-of-sight microwave relays. Not that it is all bad. It can be argued that HFT creates liquidity and thereby keeps bid-ask spreads small.
But what of trading across the planets?
I'm sure in some future colony on Mars, there will be brokers there trying the same things. But arbitraging price differences across the minutes it would take for interplanetary comms would almost certainly be impossible in context of high frequency trading. But trading houses could take advantage by having outposts in the middle between the two planets. Brokerages with outposts closer would have information before other brokers without outposts. So in theory one would place the exchange itself in the middle to mediate trade of paper instruments, though these days of course these paper instruments are only 1 and 0s recorded in ledgers in the Cloud. It would be in the middle or close to it (Lagrange points) as no doubt brokers would game interplanetary distance differences from both Earth-side and Mars-side. So traders would put in orders which would route through relays on the Interplanetary Internet. I suppose future space brokers would find some creative ways to fleece future colonists out of their hard-earned Marscoin.
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