4 ms·
I often wonder, why the need for speed. If stock markets updated once a day, would that really cause a problem? The whole aspect of making updates faster, tra
by Zenst 11y ago
I often wonder, why the need for speed. If stock markets updated once a day, would that really cause a problem?
The whole aspect of making updates faster, transactions faster will always lead to those who can afford it looking for an edge in speed and in most cases - getting it, aided or unaided.
But with such dysnimic speed any misdirection in price rise or fall can and has been in the past exhausebated and when you look at the impact again, wonder why so fast.
I can appreciete the fater exchanges operate the mroe transacitons and brokers just love commision, more transactions more commision and it was and always is a crux in any fiscal market.
Indeed the Llyods crash was due to many brokers factoring (watering down the pools of money in effect) risks (groups of insurance poiceys) so many times that when there was a big claim (asbestos) then the whole thing crashed as the pools of money to cover the insurance were eaten away so much by all this over factoring of the risks about with brokers taking a slice everytime it got passed about and reinsurance became a rererererereinsurance style affair that with so much commision taken out it was a financial timebomb awaiting to happen. Again can look more recently at mortgages and how companies polled those together as they do with insurance and reinsurance in much the same way. Though more case of hiding potentual asbestos risks in with less risker mortgages and the rest we all remember.
So can see why I do question the need for faster and faster stock markets when, too me daily would work and indeed even hourly. Would eliminate HFT and indeed make the whole market more stable and focused upon the companies and not what todays market become based upon somebody famous doing or saying something on twitter more then actual results.
- TTPrograms 11y agoI've also wondered the same thing. I've always been replied to with "it provides liquidity to the market" but I still don't see why anybody needs microsecond level liquidity. Seems like it provides marginal benefit over a minute or hourly quantized exchange at tremendous cost (to society).
- wdewind 11y agoTLDR: Compounding effects that add up over time, and extremely dubious use of the words "tremendous cost (to society)."
- lberger 11y agoHFT is a tax on the markets (and by extension society).
- wdewind 11y agoI mean...that's kind of a hugely controversial point to just say as a fact. It also completely ignores the fact that HFTs employ a lot of different strategies, some of which are uncontroversially beneficial to the market (market making).
- auntienomen 11y agoOrdinary traders obviously don't need microsecond level liquidity. But having microsecond level liquidity allows more market makers to compete with each other to provide liquidity. This competition lowers the prices ordinary traders pay for liquidity.
- pakled_engineer 11y agoAccording to this older HN posted article the way to slow down HFT strategies is get rid of the subpenny rule, such as pricing securities in increments of $0.0001 https://www.chrisstucchio.com/blog/2012/hft_whats_broken.html https://www.chrisstucchio.com/blog/2012/hft_whats_broken.htm...
- vostok 11y agoI'm not sure that this would slow down HFT, but it might cut costs for consumers. It would definitely be a good idea to have different tick sizes for different products as it's odd that the most liquid products and the least liquid products might both have a 0.5bps tick size in the US. If you do reduce the tick size you'll need to make some changes to internalization to reduce the toxicity of lit venues.
- ikeboy 11y agoHow can that be enforced? Why wouldn't secondary markets just spring up allowing people to sell in between?