The SEC should ban the use of HFT on index ETFs. The practice causes stocks to correlate in their price movements even when they should not correlate. If the price of jet fuel is extremely low because of low oil prices, then oil companies' stocks should move in relative opposition to airline stocks, whose companies benefit from lower fuel costs. Traders trading in and out of an Index ETF cause whole indexes to move in lock step, together because of the stocks all being included in an index. Companies' stocks are over-correlated to each other as a result and it distorts the markets because of the impact of HFT on liquidity, volume and pricing.
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