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Wall Street Journal: Colocation: The Root of All High-Frequency Trading Evil?

 

Trading firms, from Wall Street banks to high-frequency hedge funds and market makers, spend millions each year to place their trading models right on exchange servers. It’s a big revenue generator for both traders and the exchanges, but is it right?

That’s one of the central questions being discussed today on Capitol Hill, where high-frequency experts have once again been called to speak, this time in front of the Senate Committee on Banking, Housing and Urban Affairs. While there are several other issues at play on Thursday, where politicians are hoping to get a grasp on how to prevent another Knight Capital snafu or another “Flash Crash,” collocation is as good as any place to start.

Read Geoffrey Rogow's full article here

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