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The rise of trading quote spam

High-frequency quoting that has skyrocketed recently, leading some in the US to think it might be time for a financial non-transaction tax similar to the one in France. The French will also impose a tax on traders who submit too many unfilled quotes.

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Mary Altaffer/AP
A trader works on the floor of the New York Stock Exchange, in this June 2012 file photo in New York City. High-frequency quoting that has skyrocketed recently, leading some in the US to think it might be time for a financial non-transaction tax, like France implemented.

On Monday, I posted a聽ovely animated聽from聽Nanex聽showing the rise of high-frequency trading. What I failed to mention is that graph doesn鈥檛 show completed trades. It shows quotes.

And according to聽another nice chart from聽Nanex, it鈥檚 high-frequency quoting that has skyrocketed, not trading.

The number of聽unexecuted聽quotes, many allegedly not intended to be executed, has thus skyrocketed.

France recently took steps to try to deter the rise in quotes. In addition to a financial transactions tax it, France will also impose a tax on traders who submit too many unfilled quotes.

In short, France will levy a聽financial non-transaction tax.

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