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I read Flash Boys when it first came out. If memory serves correctly it said US exchanges are required to forward received orders to another exchange if it has better prices, to achieve the best national bid/offer (due to RegNMS).

This process (apparently) allowed HFTs to "front" the orders and get to the second exchange before the order.

I have a few questions:

-How would the HFT firm even see the order, if the first exchange didn't execute it locally and simply forwarded it?

-If exchanges forward orders to other exchanges with a better price, isn't this removing some of the need for smart order routing?

-What are the best resources for understanding US equity exchange architecture, across the various exchanges?

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    $\begingroup$ This question is far more complex than the OP realizes. I would love to answer but there is too much to be said. $\endgroup$ – amdopt May 7 '17 at 0:27
  • $\begingroup$ @amdopt wouldn't a partial answer be better than nothing? $\endgroup$ – user997112 May 7 '17 at 16:06

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