> algos that don't pay up to jump priority queues do better than algos that do
It looks to me like all of this is addressed at the version of scenario 2 that I was not talking about, the one where the HFT is working across multiple exchanges.
> exchanges have a huge incentive to make sure this doesn't happen
I'm not sure the casino analogy quite holds here, but I'll have to defer any further comment until I can find the article I mentioned somewhere in this subthread, that went into how this scenario would work in more detail.
> algos that don't pay up to jump priority queues do better than algos that do
It looks to me like all of this is addressed at the version of scenario 2 that I was not talking about, the one where the HFT is working across multiple exchanges.
> exchanges have a huge incentive to make sure this doesn't happen
I'm not sure the casino analogy quite holds here, but I'll have to defer any further comment until I can find the article I mentioned somewhere in this subthread, that went into how this scenario would work in more detail.