4 ms·

Outside of labor, the primary costs are hardware, colocation, and networking, none of which is a fee to the exchange. Please tell, how the world is supposed to

Outside of labor, the primary costs are hardware, colocation, and networking, none of which is a fee to the exchange. Please tell, how the world is supposed to provide that for free to anyone who wants it? Colocated servers are the public.

ethbro 11y ago
If NYSE wants to lobby for laws to be changed, then they're welcome to do that. Just like Uber or Airbnb when they get hit with fines. But the law's the law. "It doesn't make sense" isn't a valid defense.
- EdHominem 11y ago
  Imagine that they're providing free firewood to the public - what obligates them to provide the pickup trucks?
  - deleted 11y ago
    [deleted]
  - ethbro 11y ago
    The law, in the same way we regulate many markets that can only efficiently support fewer participants than would be required for a fully competive marketplace. Usually due to capex: energy infrastructure, network effect: financial, or limited availability of resources: wireless spectrum. If it's in the public interest to have trucks and no firewood seller would otherwise provide them. That's absolutely something government can (and IMHO should) mandate in exchange for a firewood license.
    - EdHominem 11y ago
      Well I demand that my free server have 128GB of ram, and holograms. Fucking fatcats.
KMag 11y ago
The regulation is about equal access, not free access. Now, the SIP feed contains combined market data from all of the exchanges to which the National Best Bid / Offer (NBBO) applies, so that a broker-dealer can look at the SIP feed to determine nationally what the best bid across many exchanges is and what the best offer across many exchanges is. The Reg NMS mentioned is that the broker can't give you a price (before fees) that's outside the NBBO. (There's an exception if the investor explicitly opts the order out of Reg NMS requirements and directs that the order be filled on a specific venue. Last I checked there are 70-some equity venues in the US.) The consolidated feeds are necessarily slower than the direct feeds, due to processing delays, unless the exchanges intentionally slow down their direct feeds. There are several companies that will sell you expensive FPGA or IBM Cell-based cards that will locally create a consolidated feed from all of the direct feeds. These cards aren't cheap, but are necessary for trading latency arbitrage strategies, and are also useful for low-latency market making. Of course the consolidated feed requires a slight processing delay, so unless they intentionally slow down the direct feed, quotes from NYSE will appear first in the direct feed and very slightly later in the SIP feed. The argument here is about if the delay between SIP and the direct feed is small enough to be permissible. The "public" being talked about is the paying public. Nothing in the regulation requires a free SIP feed, and I assure you NYSE doesn't provide a free real-time SIP feed. The regulation is to prevent selling an intentionally slow connection to everyone, and giving a faster feed to only their top tier customers. Disclaimer: I'm not a lawyer.
- TheNanex 11y ago
  The SIP (consolidated feed) is tasked with using the most efficient hardware and software available. If a private company can consolidate faster than the SIP, then the SIP isn't using the most efficient hardware and software available now is it? Pretty simple. The exchanges take in $500M a year in SIP fees, which are supposed to go to the most efficient hardware and software available. Pretty sure that's not happening.
  - KMag 11y ago
    > Pretty simple. Oversimplification, forgetting the laws of geometry and physics. The triangle inequality and relativity conspire against the SIP. If you're getting the SIP from B, any new prices at C go to B and then forwarded to you, so it's faster (best case equal in the degenerate triangle case) to get direct feeds from B and C and consolidate locally.

ethbro 11y ago

If NYSE wants to lobby for laws to be changed, then they're welcome to do that. Just like Uber or Airbnb when they get hit with fines. But the law's the law. "It doesn't make sense" isn't a valid defense.

EdHominem 11y ago
Imagine that they're providing free firewood to the public - what obligates them to provide the pickup trucks?
- deleted 11y ago
  [deleted]
- ethbro 11y ago
  The law, in the same way we regulate many markets that can only efficiently support fewer participants than would be required for a fully competive marketplace. Usually due to capex: energy infrastructure, network effect: financial, or limited availability of resources: wireless spectrum. If it's in the public interest to have trucks and no firewood seller would otherwise provide them. That's absolutely something government can (and IMHO should) mandate in exchange for a firewood license.
  - EdHominem 11y ago
    Well I demand that my free server have 128GB of ram, and holograms. Fucking fatcats.

KMag 11y ago

The regulation is about equal access, not free access. Now, the SIP feed contains combined market data from all of the exchanges to which the National Best Bid / Offer (NBBO) applies, so that a broker-dealer can look at the SIP feed to determine nationally what the best bid across many exchanges is and what the best offer across many exchanges is. The Reg NMS mentioned is that the broker can't give you a price (before fees) that's outside the NBBO. (There's an exception if the investor explicitly opts the order out of Reg NMS requirements and directs that the order be filled on a specific venue. Last I checked there are 70-some equity venues in the US.) The consolidated feeds are necessarily slower than the direct feeds, due to processing delays, unless the exchanges intentionally slow down their direct feeds. There are several companies that will sell you expensive FPGA or IBM Cell-based cards that will locally create a consolidated feed from all of the direct feeds. These cards aren't cheap, but are necessary for trading latency arbitrage strategies, and are also useful for low-latency market making. Of course the consolidated feed requires a slight processing delay, so unless they intentionally slow down the direct feed, quotes from NYSE will appear first in the direct feed and very slightly later in the SIP feed. The argument here is about if the delay between SIP and the direct feed is small enough to be permissible. The "public" being talked about is the paying public. Nothing in the regulation requires a free SIP feed, and I assure you NYSE doesn't provide a free real-time SIP feed. The regulation is to prevent selling an intentionally slow connection to everyone, and giving a faster feed to only their top tier customers. Disclaimer: I'm not a lawyer.

TheNanex 11y ago
The SIP (consolidated feed) is tasked with using the most efficient hardware and software available. If a private company can consolidate faster than the SIP, then the SIP isn't using the most efficient hardware and software available now is it? Pretty simple. The exchanges take in $500M a year in SIP fees, which are supposed to go to the most efficient hardware and software available. Pretty sure that's not happening.
- KMag 11y ago
  > Pretty simple. Oversimplification, forgetting the laws of geometry and physics. The triangle inequality and relativity conspire against the SIP. If you're getting the SIP from B, any new prices at C go to B and then forwarded to you, so it's faster (best case equal in the degenerate triangle case) to get direct feeds from B and C and consolidate locally.