3 ms·

I'm not sure where you get the impression HFT firms only focus on speed. They focus both on being smarter (having better signals) and being faster; it's only ve

by consz 9y ago

I'm not sure where you get the impression HFT firms only focus on speed. They focus both on being smarter (having better signals) and being faster; it's only very niche HFT firms which rely entirely on speed as their edge. Also, what's your goal here? It doesn't sound like it'll necessarily impact the profits of the HFT industry as a whole if you do this, merely lower the cost, so on net making the average HFT firm richer.

ForHackernews 9y ago
Lowering costs should allow more firms to enter the market, not just pad the profits of existing participants. If a HFT firm is richer because they're smarter, I don't have any problem with that. That's how investing works. Developing smarter ways to analyze data, setting prices accurately, having a market that responds to new information, these are all social goods. I am less convinced that everyone trying to be in the same datacenter as the NYSE (https://www.bloomberg.com/news/articles/2016-04-13/inside-equinix-s-ny4-data-center-where-wall-street-trades https://www.bloomberg.com/news/articles/2016-04-13/inside-eq...) adds any value for society.
- consz 9y ago
  I mean, I'm all for lowering costs in the HFT industry, it'll mean the company I work at makes more money -- I just didn't realize you were arguing for the industry, not against it. I don't think any HFT firm would disagree with lowering costs to themselves, the same way they'd prefer that CPUs were never upgraded (so they didn't have to waste money buying the latest ones). Co-location is good because it commoditizes the closest location to the exchange. Speed always matters, even in randomized auctions, even if you have artificial latencies added to your order, even if... Without co-location done the way it is now, you get into situations where a single firm buys the actual nearest location, and has a monopoly over being the fastest competitor. Now, anyone can access it.
  - ForHackernews 9y ago
    > Now, anyone can access it. Where "anyone" = any investment firm with millions of dollars to spend on their IT. :)
    - consz 9y ago
      Yes, things costs money. It costs on the order of several thousand per month (on the upper end), not millions of dollars -- moreover, this is commensurate with the cost of actually running such a data center (which the exchange sponsoring the colo typically does). I would also argue that, for anyone who actually receives any benefit from being colocated, several thousand dollars a month in operating costs is not prohibitively expensive.

by consz 9y ago

ForHackernews 9y ago

Lowering costs should allow more firms to enter the market, not just pad the profits of existing participants. If a HFT firm is richer because they're smarter, I don't have any problem with that. That's how investing works. Developing smarter ways to analyze data, setting prices accurately, having a market that responds to new information, these are all social goods. I am less convinced that everyone trying to be in the same datacenter as the NYSE (https://www.bloomberg.com/news/articles/2016-04-13/inside-equinix-s-ny4-data-center-where-wall-street-trades https://www.bloomberg.com/news/articles/2016-04-13/inside-eq...) adds any value for society.

consz 9y ago
I mean, I'm all for lowering costs in the HFT industry, it'll mean the company I work at makes more money -- I just didn't realize you were arguing for the industry, not against it. I don't think any HFT firm would disagree with lowering costs to themselves, the same way they'd prefer that CPUs were never upgraded (so they didn't have to waste money buying the latest ones). Co-location is good because it commoditizes the closest location to the exchange. Speed always matters, even in randomized auctions, even if you have artificial latencies added to your order, even if... Without co-location done the way it is now, you get into situations where a single firm buys the actual nearest location, and has a monopoly over being the fastest competitor. Now, anyone can access it.
- ForHackernews 9y ago
  > Now, anyone can access it. Where "anyone" = any investment firm with millions of dollars to spend on their IT. :)
  - consz 9y ago
    Yes, things costs money. It costs on the order of several thousand per month (on the upper end), not millions of dollars -- moreover, this is commensurate with the cost of actually running such a data center (which the exchange sponsoring the colo typically does). I would also argue that, for anyone who actually receives any benefit from being colocated, several thousand dollars a month in operating costs is not prohibitively expensive.