Flash Trading Fight Reignites, a front runners paradise?

[WhiskeyGirl]

Flash orders give some traders the ability to execute market orders fractions of a second before others get a crack at them. They've been around in one form or another for decades but shot to public attention when NYSE Euronext ( NYX - news - people ), the Securities Industry and Financial Markets Association, and others raised concerns they could create two-tiered markets that disadvantage the general investing public.

..."This proposal will once and for all get rid of flash trading, which, if left untouched, could seriously undermine the fairness and transparency of our markets."

Critics don't like flash orders because they say they give advantages to a few professional traders at the expense of others. An order comes into Direct Edge, which posts it on its displayed book for all to see. If it doesn't get completely filled (or filled at all) there, instead of immediately sending the order on to another market, as it is supposed to under regulation national market system, Direct Edge will hold it up for one-tenth of a second and flash it to 30 trading firms that have signed up to participate in its flash program (it calls it the enhanced liquidity provider program). Those 30 firms have a chance to fill the order before the rest of the market.

read more here -
http://www.forbes.com/2009/09/17/sec-flash-options-business-wall-street-flash.html

Long term investing in less than a nano-second?