For this particular case I can make the answer very simple. How about waiting half a second.
Can you not see how it's bad in the specific case where they already issued the order to all exchanges but your order gets processed first because you used a different cable? Ignore the more ambiguous cases for the moment.
Why is protecting the interests of hedge funds and investment banks important enough it needs a special rule? This isn't a rule that will benefit the little guy; it strictly benefits the biggest fish.
> Can you not see how it's bad in the specific case where they already issued the order to all exchanges but your order gets processed first because you used a different cable?
To be clear, your concern is strictly that if a hedge fund is buying a very large amount of stock, this will cause the price to move against them as people react to it, and you think they should get a full half second (an eternity at the speed of the modern market) to buy as much as they want before people are legally allowed to react?
That sounds like a terrible idea, and in the specific case you list: No, I don't see why that's bad. I don't see why anyone except a large hedge fund or investment bank would.
Further: Once the order hits the market, you're saying there should be a half second window during which no one can do anything except the hedge fund. But as soon as that half second window closes, there will be a race to (finally) react. Which will be won by...the HFT firms, right? Won't they be able to, hypothetically, get their rSo even if we accept your premise, isn't this just shifting the victims around without fixing anything?
"Half a second" was not meant to mean "enforce a delay of precisely 500000 microseconds". The point is that the problem would be solved if traders would chill out for the blink of an eye. The fact that it's hard to force people to chill out is a completely separate issue.
> To be clear, your concern is strictly that if a hedge fund is buying a very large amount of stock, this will cause the price to move against them as people react to it,
> in the specific case you list: No, I don't see why that's bad.
The original scenario has nothing to do with order size. The scenario is that X sends a simultaneous order to multiple exchanges, but while it's still in transit to most of the exchanges Y reacts to the order and submits their own on a faster cable, getting there before the order they're reacting to. I think such an outcome is clearly bad. I won't suggest a fix to avoid distraction. Do you disagree with it being bad? Picture it happening to an old lady if you have no sympathy for hedge funds.
Can you not see how it's bad in the specific case where they already issued the order to all exchanges but your order gets processed first because you used a different cable? Ignore the more ambiguous cases for the moment.