4 ms·
I guess I see why high frequency trades are necessary in the current trading framework, but looking at the situation from a high level, isn't it obvious that th
by shasta 11y ago
I guess I see why high frequency trades are necessary in the current trading framework, but looking at the situation from a high level, isn't it obvious that the resources being spent on microsecond level response improvements don't benefit anyone but the winners? Can someone argue otherwise?
- vasilipupkin 11y agoIt's the opposite. The resources being spent on microsecond speed race is a form of a tax imposed on HFT by society. If all big HFT firms spent on getting faster, they don't benefit in expectation, since all the competitors will be equally fast, but society benefits because that spending goes to wider economy outside HFT
- shasta 11y agoRight, that's the obvious situation that I see. I'm wondering if anyone can argue otherwise? If not, why isn't there a bigger push for market infrastructure that doesn't advantage high frequency trades? I don't know that most high frequency microtrades are a real problem either way, since it seems mostly zero sum among the people playing that game. But whenever there is a macro change in a price that takes place over a tiny time scale, it seems that we shouldn't be advantaging speed in getting there first.
- vasilipupkin 11y ago"If not, why isn't there a bigger push for market infrastructure that doesn't advantage high frequency trades?" because most of those who could do the pushing are ignorant and/or confused about the economics of competitive markets and how competition benefits society as a whole and not really those who are competing
- tptacek 11y agoYou're right, although you should also build into that argument the benefits that accrue to technologists that work at HFT firms, and to technology vendors who sell to them.