4 ms·

That's not my argument at all. My claim is that technology is still a huge advantage with batch auctions. It might even be a bigger advantage with batch auction

by vostok 8y ago

That's not my argument at all. My claim is that technology is still a huge advantage with batch auctions. It might even be a bigger advantage with batch auctions. More complex market structure usually benefits those who understand it best. I also don't understand your argument about HFTs having an advantage over investors. Investors have advantages over HFTs too. Are those unfair? Why are you so concerned about the advantages that HFTs have over investors, but not advantages that investors have over HFTs? I also hope you understand how small the HFT industry is. There are single very large investors who make more than the entire HFT industry.

allenz 8y ago
How are batch auctions more complex? You still use the same rules for resolving priority. How can the rules be gamed? Investors do not have any unfair advantages over technical traders. They take different approaches for price discovery, but both should be rewarded. HFTs have the unfair advantage of having faster access to information, including analyst reports.[1] [1] https://www.bloomberg.com/professional/product/news/ https://www.bloomberg.com/professional/product/news/
- vostok 8y ago
  I'm not going to delve any further into technical details of batch auctions. I never said anything about unfair advantages. You're the one who's ascribing fairness to this whole thing. I just fail to see how hiring smart engineers (HFTs) is an unfair advantage whereas hiring smart former investment bankers and research analysts (hedge funds, mutual funds, other investors) is not. It just seems like yet another baseless attack on technical nerds. Also I hope I didn't give the impression that HFTs and investors are competing with each other. HFTs more naturally compete with banks and other market makers. It's just that the advantages that investors have are one of the reasons why HFTs don't expect to make half a spread every time they trade. You could argue that the work of HFTs is less important than work of investors and that they should make less than the investors do. I would agree with you, but this is already the case and it's not even close how much more money investors make.
  - allenz 8y ago
    > HFTs and investors [don't compete] I started with an example where investors lose money due to adverse selection from HFTs, and I don't think that you've really addressed that argument.

by vostok 8y ago

allenz 8y ago

How are batch auctions more complex? You still use the same rules for resolving priority. How can the rules be gamed? Investors do not have any unfair advantages over technical traders. They take different approaches for price discovery, but both should be rewarded. HFTs have the unfair advantage of having faster access to information, including analyst reports.[1] [1] https://www.bloomberg.com/professional/product/news/ https://www.bloomberg.com/professional/product/news/

vostok 8y ago
I'm not going to delve any further into technical details of batch auctions. I never said anything about unfair advantages. You're the one who's ascribing fairness to this whole thing. I just fail to see how hiring smart engineers (HFTs) is an unfair advantage whereas hiring smart former investment bankers and research analysts (hedge funds, mutual funds, other investors) is not. It just seems like yet another baseless attack on technical nerds. Also I hope I didn't give the impression that HFTs and investors are competing with each other. HFTs more naturally compete with banks and other market makers. It's just that the advantages that investors have are one of the reasons why HFTs don't expect to make half a spread every time they trade. You could argue that the work of HFTs is less important than work of investors and that they should make less than the investors do. I would agree with you, but this is already the case and it's not even close how much more money investors make.
- allenz 8y ago
  > HFTs and investors [don't compete] I started with an example where investors lose money due to adverse selection from HFTs, and I don't think that you've really addressed that argument.