> Can you explain why we need nanosecond trading for this?
Can you explain why you wouldn't want nanosecond for this?
I am quite happy to buy shares where it's the most convenient for me, knowing that someone, somewhere, is constantly arbitraging stock prices on all markets so that all prices are the same regardless.
What upside is there for me, as an investor, that this happens every minute instead of every nanosecond? None, it's objectively worse.
> Why can't we use trading speeds such that everybody can participate, not just a few "gatekeepers"?
But that makes no sense... HFTs are not _competing_ with regular market participants, on the contrary they are providing a service to them. The only competitor to HFTs are other HFTs, because, well, they are providing the same service.
If you want to "participate" in something and you feel hindered by HFTs, that basically means you are not a typical investor, but rather a market maker / arbitrager, so then... competition is fair game, have fun.
Your argument is akin to "we should limit the speed of UPS trucks because I want to compete but I cannot afford to buy fancy trucks". UPS does not prevent the normal operation of package delivery, nor are they competing with people receiving packages. They are only competing with other delivery companies.
> The average internet connection should be fast enough for trading, by now.
Well even if we were to put latency aside, no, your internet connection won't cut it anyway, at least not for any kind of direct market access.
First, not anybody can "do DMA". There are a vast quantity of regulations, licenses, tests, audits, and fees to be an exchange participant. Regulators don't let just anyone participate on public exchanges, even on emerging markets.
1) Be a regulated entity, pass individual certifications, have a risk, legal and compliance team, yearly assessments, etc.
2) Pay a lot of money for access to the exchange market data live ($10k-$100k/month/exchange).
3) Have all your algos certified, risk assessed, and staged on the scenarios the exchange will provide you with.
4) There is no multicast on internet, and anyway unless you have a Solarflare/Mellanox NIC at home, and a crazy good ISP, you won't ingest 10Gb linerate that simply.
5) You need all the things around the ecosystem... symbology, security master, etc...
6) Even cash equities need to be settled, you will need a custodian and a back office, stocks are not tokens that magically change hands. Someone need to post cash, update company records, custody collateral, handle corporate actions, etc
There is no world in which a _regular_ investor will touch the markets directly anyway, everybody goes through a broker or deals with HFTs for order flow, and it's not "just because they are faster", there is a world of complexity/regulation/etc that goes with it.
Even most of the top hedge funds in the world are not direct market participants, but rather use brokers.
The very reason multistrat funds even exist and are so attractive, is that you can net your trades internally at mid and avoid even having to use lit orderbooks, reducing your market impact.
So, no, I don't think anyone sees HFTs as a hindrance, nor are willing to be market participants. This sounds sounds a bit like a naive simplification of the state of things (I don't mean it derisively, it's not a trivial subject).