The Commodity Futures Trading Commission is trying to hammer out a definition for high-frequency trading, which I wrote about for The Wall Street Journal this Wednesday. It’s a tough job for the commission, because few outsiders truly understand how high-frequency firms operate.

Indeed, there are few people in the world–if any–who can authoritatively say how these firms trade en masse. While employees at one firm may have a strong understanding of how they operate, they can have little idea how the dozens of HFTs they’re competing against trade. Even exchange operators can’t know fully what’s going on, because the trades are dispersed across dozens of markets.

I commend the CFTC for what it’s doing. I needs to be done. But it’s not going to be easy. Because it’s a dark market.

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