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Matt Levine

SEC Wants to Look at Bigger Ticks

The worry about high-frequency trading is basically that it makes markets too efficient. So the SEC is going to fix that.

One way you could describe the debate over high-frequency trading is that it's really a debate over whether U.S. equity markets are too efficient. That is: The job of equity markets is to provide liquidity and price discovery. An efficient market will provide liquidity at a very low cost, and will adjust prices very quickly to respond to changes in demand.

That sounds good, but it's not equally good for everyone. Compared to a less efficient market, a very efficient market will be: