Fluctuations in supply over milliseconds aren't causing an inefficient distribution in resources though. There is an inefficiency here though in the extraction of wealth from the financial system without a corresponding input simply by making high-frequency transactions.
What resources were you thinking of?
The only resource I can think of that needs instantaneous variation in supply is electricity. Logistics of distribution mean that supply of most other things will only be variable on the order of 6 hours or so. Or do you mean supply of shares to be traded?
As an outsider, trading of securities and derivatives appears to be a long way from the initial goal of optimising the market and providing capital.
Thinking aloud: If trades were pegged to a single time each day (per market) how would that affect the goal of supplying capital (I'm guessing it wouldn't really)? It would reduce liquidity by quantising it in step with the market but would that be harmful?
I'm sure someone will point out to me why, beyond making traders less wealthy, that's a bad idea?
What resources were you thinking of?
The only resource I can think of that needs instantaneous variation in supply is electricity. Logistics of distribution mean that supply of most other things will only be variable on the order of 6 hours or so. Or do you mean supply of shares to be traded?
As an outsider, trading of securities and derivatives appears to be a long way from the initial goal of optimising the market and providing capital.
Thinking aloud: If trades were pegged to a single time each day (per market) how would that affect the goal of supplying capital (I'm guessing it wouldn't really)? It would reduce liquidity by quantising it in step with the market but would that be harmful?
I'm sure someone will point out to me why, beyond making traders less wealthy, that's a bad idea?