5 ms·
FFS. It's the worst because it parasitically drains the market while adding exactly zero economic value.
by flerchin 11y ago
FFS. It's the worst because it parasitically drains the market while adding exactly zero economic value.
- eggy 11y ago'it' being Fintech? Which type of Fintech product do you think does what you state?
- collyw 11y agoHigh frequency trading would be one for me.
- tome 11y agoIf high frequency traders add zero value then why do counterparties enter into trades with them?
- collyw 11y agoSo can you explain the economic value that HFT creates, with some evidence rather than just rhetoric?
- consz 11y agoIsn't the fact that people trade against their quotes sufficient evidence? After all, if someone besides the HFT had a better quote (e.g. better price), people would trade against that instead of the HFT's quote.
- ricardobeat 11y agoNo. Not unless they become high-frequency traders themselves. HFT will always win the trade since they can instantly offer a 1 cent lower price.
- consz 11y agoThat sounds like the HFT is providing a better bid-ask spread.
- fennecfoxen 11y agoThe economic value is providing better prices for people buying stocks. (If they didn't provide better prices, no one would trade with them, they'd trade with other market participants, because those are the rules of the exchange: you get a better price when it's offered.) The economic value is found by removing overhead on the order of around a cent (or less) per share per transaction, which starts very very small but adds up quickly. (There's also a huge latency-game going on there because you can't price more accurately than one cent, due to regulations, which is another inefficiency.)
- deleted 11y ago[deleted]