There seems to be some confusion between algo trading and HFT. Algo trading is fine provided it is restricted to deep, liquid stocks and the orders are of sufficient size and value to enable execution in reasonable volumes. To see so many trades of 1, 2, or share in the less liquid stocks is not reflective of a deep, liquid, mature stock market and the market looks ridiculous. It's like buying a house brick by brick.
This is why the regulator needs to impose minimum order values and volumes for algo orders so that we don't see, for example, 127 trades for 1 or 2 shares in stocks like SLX and BCI (which yesterday looked like a joke). I don't believe these VWAP algos achieve their purpose in mid to low cap stocks anyway. And the broker is simply paying a trade fee to ASX on every 1 or 2 share trade. Algos should be restricted to the top 100 stocks and orders should be of a minimum value, say $25k.
HFT is entirely different. I cannot see how a HFT programme can front run any other broker's order, regardless of whether the HFT broker has co-location at ASX. A HFT programme can guess what another broker's order might be but that's speculation. Any broker can speculate what an order might be. A HFT order cannot jump ahead of any other order at the same price because of price/time priority rules. It can over-bid or under-offer any other order but so can everyone else if they wish to. I don't believe there is much HFT occurring on ASX but there is far too much algo trading in stocks which aren't liquid enough to accommodate that type of trading. Just my opinion.
