What did the SEC do when it realized the danger to other investors from high-speed trading? Did it warn the American people? Order high speed trading to cease? Ban algorithms designed to cheat other investors? Absolutely not!
Recent arguments accuse high-frequency traders (HFTs) of a specific market distortion scheme. The HFTs, the argument goes, use their soon-to-be-cancelled limit orders to mislead large investors about the shape of the supply and demand curve.