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Those 100m are not destroyed by burning them in an HFT furnace but rather used to pay developers, hardware, factory workers etc. Sure, it's not going directly i

Those 100m are not destroyed by burning them in an HFT furnace but rather used to pay developers, hardware, factory workers etc. Sure, it's not going directly into infrastructure but it is not lost. In fact, it's quite possible that if it wasn't invested into HFT it would be held as cash by the company or paid out as a dividend (which is fine as well).

snovv_crash 7y ago
That is false. The 100m could have been spent on something which increases the productivity of people. It would still go to devs, factories, etc but at the end there is something from which society benefits.
- dna_polymerase 7y ago
  So paying hardware manufacturers and programmers for their work doesn't benefit society? It is not like firing these people would see more cancer research or other stuff you might regard as more beneficial for society.
  - snovv_crash 7y ago
    It does, but it doesn't create anything which can be leveraged to improve things further. Might as well just give the people the money directly, with no expectations of deliverables.
  - habnds 7y ago
    It's important to make money but,how much you're paid for your work is an exceptionally bad way to measure that work's value in our society. Tim O'Reilly said "Create more value than you capture." I would argue that hft is the definition of people capturing value that they didn't create.
    - vasilipupkin 7y ago
      Firstly, this article has nothing to do with HFT. Goldman is executing on behalf of clients who are not HFT Secondly, your statement makes an implicit assumption that there is no value in providing liquidity to capital markets. This assumption is false. Think of your local grocery store. Sure, you could drive down to the distribution center and buy stuff there. But instead you go to the store where it’s conveniently laid out for you. Same with HFT. If it didn’t exist, you would still be able to buy and sell but markets would be a lot less liquid and buying and selling less convenient.
      - habnds 7y ago
        An article titled "GS spending millions to shave millisecconds off stock trades" has nothing to do with HFT? It isn't at all clear to me buying and selling at an auction even only once a day, let alone once a minute or second would make financial market end user worse off. Grocery logistics is a terrible analogy for financial markets.
        growse 7y ago
        The "F" in in "HFT" stands for "Frequency". This is a separate concept from latency. GS are spending money so they can execute their clients' orders on the market faster, to reduce the risk of the price shifting between order and execution. > It isn't at all clear to me buying and selling at an auction even only once a day, let alone once a minute or second would make financial market end user worse off. Go look at the history. Back before the 80s, trading was done by hand, sub-second anything was impossible. Guess what! Spreads were enormous, and the cost of doing business was huge. As a financial market end user (I have a pension), I want the smallest spreads possible.
        habnds 7y ago
        GS is spending the money on this project to reduce high frequency traders ability to capture some of the value of their trades on behalf of clients. Why do you think the price moves away from them? It isn't random. It has everything to do with hft, which has everything to do with market structure. I'm highly familiar with the history, no one is advocating for a return to open outcry. Your pension is almost certainly a GS client and footing the bill for this project through execution costs. A periodic auction model would make latency much less of a problem and society's time and energy could be put into solving real problems.
esailija 7y ago
Actually he probably meant that 100 million are being used to redirect efforts and resources destructively. Your argument can be used just as well to defend an "investment" of 100m into efforts to dig up aluminium, turn it into dust and throw it into oceans.
Arbalest 7y ago
This makes the assumption that time in and of itself has no relevance. Sure the money is reused, but ultimately what is valuable is labour output, and usually that has time relevance. Further, if we consider the activity as steady state, that now means a % of the labour force is semi-permanently unable to be used for something else.
jammygit 7y ago
Your definition of 'waste' is awfully narrow. I'm not sure anything but destruction of the cash is waste in that view - except that its not even then a total waste because you are helping the money burning industry and furnace industry to thrive.
sumnulu 7y ago
Burning money is not that bad, even burning 99% of all the money in the world.
- MaxBarraclough 7y ago
  ...what?
varjag 7y ago
Is this the finance edition of broken windows fallacy?
TheCoelacanth 7y ago
Broken window fallacy. The work those people are doing could be used for something else, so if they are doing something useless, it is a waste. If having people work on something useless was beneficial, you could just pay them to dig holes in the ground and fill them up again.

snovv_crash 7y ago

That is false. The 100m could have been spent on something which increases the productivity of people. It would still go to devs, factories, etc but at the end there is something from which society benefits.

dna_polymerase 7y ago
So paying hardware manufacturers and programmers for their work doesn't benefit society? It is not like firing these people would see more cancer research or other stuff you might regard as more beneficial for society.
- snovv_crash 7y ago
  It does, but it doesn't create anything which can be leveraged to improve things further. Might as well just give the people the money directly, with no expectations of deliverables.
- habnds 7y ago
  It's important to make money but,how much you're paid for your work is an exceptionally bad way to measure that work's value in our society. Tim O'Reilly said "Create more value than you capture." I would argue that hft is the definition of people capturing value that they didn't create.
  - vasilipupkin 7y ago
    Firstly, this article has nothing to do with HFT. Goldman is executing on behalf of clients who are not HFT Secondly, your statement makes an implicit assumption that there is no value in providing liquidity to capital markets. This assumption is false. Think of your local grocery store. Sure, you could drive down to the distribution center and buy stuff there. But instead you go to the store where it’s conveniently laid out for you. Same with HFT. If it didn’t exist, you would still be able to buy and sell but markets would be a lot less liquid and buying and selling less convenient.
    - habnds 7y ago
      An article titled "GS spending millions to shave millisecconds off stock trades" has nothing to do with HFT? It isn't at all clear to me buying and selling at an auction even only once a day, let alone once a minute or second would make financial market end user worse off. Grocery logistics is a terrible analogy for financial markets.
      - growse 7y ago
        The "F" in in "HFT" stands for "Frequency". This is a separate concept from latency. GS are spending money so they can execute their clients' orders on the market faster, to reduce the risk of the price shifting between order and execution. > It isn't at all clear to me buying and selling at an auction even only once a day, let alone once a minute or second would make financial market end user worse off. Go look at the history. Back before the 80s, trading was done by hand, sub-second anything was impossible. Guess what! Spreads were enormous, and the cost of doing business was huge. As a financial market end user (I have a pension), I want the smallest spreads possible.
        habnds 7y ago
        GS is spending the money on this project to reduce high frequency traders ability to capture some of the value of their trades on behalf of clients. Why do you think the price moves away from them? It isn't random. It has everything to do with hft, which has everything to do with market structure. I'm highly familiar with the history, no one is advocating for a return to open outcry. Your pension is almost certainly a GS client and footing the bill for this project through execution costs. A periodic auction model would make latency much less of a problem and society's time and energy could be put into solving real problems.

esailija 7y ago

Actually he probably meant that 100 million are being used to redirect efforts and resources destructively. Your argument can be used just as well to defend an "investment" of 100m into efforts to dig up aluminium, turn it into dust and throw it into oceans.

Arbalest 7y ago

This makes the assumption that time in and of itself has no relevance. Sure the money is reused, but ultimately what is valuable is labour output, and usually that has time relevance. Further, if we consider the activity as steady state, that now means a % of the labour force is semi-permanently unable to be used for something else.

jammygit 7y ago

Your definition of 'waste' is awfully narrow. I'm not sure anything but destruction of the cash is waste in that view - except that its not even then a total waste because you are helping the money burning industry and furnace industry to thrive.

sumnulu 7y ago

Burning money is not that bad, even burning 99% of all the money in the world.

MaxBarraclough 7y ago
...what?

varjag 7y ago

Is this the finance edition of broken windows fallacy?

TheCoelacanth 7y ago

Broken window fallacy. The work those people are doing could be used for something else, so if they are doing something useless, it is a waste. If having people work on something useless was beneficial, you could just pay them to dig holes in the ground and fill them up again.