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Comment by meteor333 | Hacker News Reader

Honest question: Is there a way to circumvent these HFT firms and create a direct trading app with retailers interest in mind?

If yes I'd love to work with someone to make this happen (technical person here).

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I'd love to see something like Uniswap for stocks. Essentially replacing the orderbook with an equation taking HFTs out of the equation and allowing regular users to make money providing liquidity.

Regulations make that more or less illegal. Executions must happen at the NBBO (national best bid / offer). You can't arbitrarily choose which orders to match.

IEX is an exchange with the goal of executing its trades without HFT firms in the middle. https://iextrading.com/

The harder part for the average person is ensuring their brokerage routes their order flow through IEX. I am not sure how the average person would do that.

I am not familiar with the legal aspect, but technically this is definitely possible. You basically just need to rent a server in an exchange colo center, and buy software certified to submit trades / consume market data on that exchange. Then build your brokerage app on top of that "direct market access" software.

You can directly route all your orders to an exchange, but HFT firms are active there as well, and they might even get paid for it by the exchange (which you have to pay much higher commissions than what retail traders are paying right now). All alternatives eventually end up reinventing what the HFT firms do.

Or creating an alternative exchange in which HFT is not allowed.

But it must be possible to build an app which serves retailers as the customers vs these HFTs? For example, charging monthly subscription or paying micro fees per trade. What are the costs involved for trading directly in exchanges?

In order to process actual securities orders to actual exchanges, you'll need to file a metric ton of paperwork with your state government and the federal government, and comply with a lot of regulations.

And the infrastructure, market access, lisences

If you want commission free trading then you need the HFT firms and payment for order flow. These firms hurt institutional investors much more than retail.

Let's say it's not commission free. What are the actual costs for paying per trade. What's the math for monthly subscription if we follow Netflix model?

Not true; you can make money off of interest on cash, and interest from lending stock to shorters.

Sure, if people wanted to pay to trade.

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