This blog article has huge technical problems and is not a financial community technical journal. It is in fact a political blog with it's own agenda to push. Even without these giant warning signs what they describe in this article is not illegal or unethical.
After reading this article your assertion is that it is unethical and/or illegal for market makers to use standard market orders that are filled in legal and standard ways as price information signals, but it is not illegal and/or unethical for large market participants to hide their order flow with specialized orders and/or venues?
>It is in fact a political blog with it's own agenda to push.
It is describing a commonly used HFT trading strategy in objective terms. Your ad hominem attack on their credentials and agenda does not change this.
>After reading this article your assertion is that it is unethical and/or illegal for market makers to use standard market orders that are filled in legal and standard ways as price information signals, but it is not illegal and/or unethical for large market participants to hide their order flow with specialized orders and/or venues?
What was just described is detecting a large institutional order through the use of 'pinging' trades and then effectively taking advantage of that knowledge by trading ahead of it. That is NOT market making.
It is not strictly speaking insider trading or front running either, but it combines features of both practices.
"Your ad hominem attack on their credentials and agenda does not change this."
An ad hominem attack assumes that my attack is based on an irrelevant fact about the arguer. That the arguer has no experience in, and cannot articulate a common description of the issue in question is not an ad hominem attack. Just like saying that I have no basis in describing rabbinical law and should therefore not be determining what is and is not kosher, me saying that your source doesn't know what they are talking about when it comes to electronic trading is what is important.
"What was just described is detecting a large institutional order through the use of 'pinging' trades and then effectively taking advantage of that knowledge by trading ahead of it."
What is described in that article is 1 market participant, using a well known and perfectly legal market means to send in orders that they want to trade and then extrapolating from the completion of those orders, information about another participant that is using highly exclusionary, extra-market venues (dark pools) to hide their desire to change the price of an instrument.
That you think the market participant that is most disadvantaged in this relationship should be penalized more says more about your biases than anything else in the market dynamic.
>A classic aggressive strategy involves hunting and trapping “whales.” It is a good example of aggressive HFT strategy.
I apologize for not explaining terminology used by the financial community in laymans' terms.