Do you believe stock markets offer "Honest Price Discovery"?

The US stock markets, that is.

Or through the magic of high speed trading could the brokerages be occasionally to routinely doing this, its called "front running":

I order 100 shares of a stock at a limit price of $20 per share.
My brokerage assures me they will actually buy on my behalf at the lowest possible price they can find, not to exceed my limit of $20 per share.
My broker then buys the stock at $19.50 per share and immediately sells it to me for $20 per share, pocketing the $0.50 per share difference.
I get my stock for the price I was willing to accept, never knowing that a third party purchase was made by my brokerage.

Who would ever open the books to each and every one of the millions of daily trades and review them in fine detail to see if this is never happening?

I'm only asking because I have never actually gotten a stock at even a penny less than my limit price.

I believe my example of $0.50 was extreme, and intended only to emphasize the point. The actual front running is probably only a penny to perhaps a few pennies on most transactions. Front running is against the law. But who would know when millions of trades are made daily.

I've heard that 80% or more of trades these days are done by high speed computers, and stocks these computers are buying and selling are held only for mere seconds to at most a few minutes. Tradebot Systems is the largest of the high speed companies that trades zillions of times daily and ends the day owning no stock positions. They only hold shares for mere seconds at most. I believe they have never lost money in any up or down market. They are however an example of a company that does not buy and sell shares for customers. They buy and sell for themselves (by the fraction of a second) only to make a profit for themselves. Buy at $19.01, and sell perhaps not even a full second later at $19.02, then do this over and over again all day long using high speed super computers. If they can do this and be successful at it, I just figured that the brokerages could do the same while facilitating trades for their customers. This latter exercise is what is illegal. What Tradebot Systems does is not (yet at least) illegal.

Tradebot used to be located in Kansas City, but they recently moved to Wall Street. They calculated that the time required for electrical signals (traveling at near the speed of light) to go back and forth from Wall Street to Kansas City was losing them opportunities to make more money and trade even faster. Tradebot Systems alone often accounts for 10% or more of the total number of trades made on the big exchanges daily. And they are not alone.

Yanche's article link confirms that in 2009 78% of the Dollars moving within the stock markets for the entire year were from high speed super-computerized "vulture" corporations (all functioning similarly to Tradebot Systems) that are merely in it to legally scam the system. This adds yet more fuel to my original question regarding honest price discovery. With close to 80% of all trades being executed by super computers that are merely trying to out guess each other by the millisecond, with no intention to ever actually own and hold any corporate stocks, where is the honest price discovery with respect to a corporate stocks value coming from, and to what degree is this game playing to skim your money out of the stock markets distorting honest price discovery? As I see it these companies add no value to humanity at all.

Between this and front running, I guess I just joined the "demonizing Wall Street" crowd,

Through 2008 Tradebot Systems had yet to have a single money losing trading day, and they have been in business since 1999. I wonder if this amazing track record is still intact? Bernie Madoff was in the wrong business. We stood in awe of Hillary Clinton when she turned $1000 into over $100,000 in the futures market, by making 19 straight correct calls. Everyone should be in awe of Tradebot Systems and its ilk. They are amazing!!!!

http://georgewashington2.blogspot.com/2010/10/70-of-all-stock-market-trades-are-held.html

samhill wrote:Dann, are you saying then that basically it's OK for any employee to "wet their beak a little" or just the ones in certain occupations? I was always under the belief that you know what you are going to get paid when you take a job so you do the best you can & hope to move up or look for something more lucrative.

Excellent point samhill! You have nailed it! A scam in one endeavor should be (and is) as bad (and as illegal) as a scam perpetrated in any other.