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A Snap in Time

Snap your fingers.

Does that half second matter? If you listen to practitioners of high-frequency trading, sure.

Requiring an order to "live" for the entirety of 500 milliseconds-half a second-gives an advantage to an "internalizer" of trades. Brokers.

That will reduce "liquidity" because firms that are willing to place (and cancel) orders at a greater speed will be neutered."A minimum order resting time is like telling a newspaper when they have news that you can't put it out yet as we won't allow you to. It goes against any democracy almost,'' went the plaint captured by Markets Media.

Capital markets are about putting money into stocks you believe in and staying away-or shorting-those stocks you don't. For the long term.

If you can't keep your order in place, one way or the other, for half a second, you have no beliefs at all. You've done no true financial analysis.

So comes the Economic and Monetary Affairs Committee of the European Union, which Wednesday unanimously approved a rule proposal that all trading orders-to buy or cancel-should be valid for one half second.

Yes, that could disrupt a wide range of high-frequency trading models. But to hold your order for a half a second? No brainer. The U.S. should follow suit.

A half-second rule would allow fund companies and other investment firms to concentrate on investing. Not finding the fastest possible technology for placing or withdrawing an order. If you can't make your mind up about the "long term" prospects of a stock when you have 7,200 opportunities every hour (in a half-second world), you're way too indecisive. This is not liquidity. This is absurdity.

You can now build an order book that shows the full "depth of market" in 1.2 millionths of a second. What that says is: Let the market breathe for a full second. Let all orders build up. Then, prioritize matches by highest price and biggest size of order. Work down from there.

Fund managers can work with that. No one will be jumping ahead of them to grab an order.

So can high-frequency traders. They can focus on putting more smarts in their strategies, rather than putting so much time and thought into wringing out the next billionth-of-a-second bottleneck out of hardware or software.

All they have to do is figure out what they want to do in the next half-second. Or two.