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For what it's worth, I used to work for GS and was in the algorithmic brokerage business for 2009-2010. One thing a lot of commenters on this thread are missin

For what it's worth, I used to work for GS and was in the algorithmic brokerage business for 2009-2010. One thing a lot of commenters on this thread are missing here is this isn't the same as an HFT or hedge fund, this is the brokerage business - executing orders on behalf of GSs clients, who are largely institutional investors, hedge and pension funds etc. The real-world impact of increased speed of execution by brokers is less money left on the table for HFTs to snap up and less slippage to the actual economic beneficiary (ie the actual retail investor or pension fund investing people's money gets a better trade).

jfengel 7y ago
Does GS do HFT itself? Is there a conflict of interest?
- seanhunter 7y ago
  I'm not a current employee, but at the time that I was, they did have a small unit who did pseudo-HFT on a prop basis and various electronic market-making businesses, but they were all firewalled off from the people who did brokerage business. We didn't share code or information with them and for obvious reasons they had no ability to view client order flow, unexecuted orders etc. Likewise people in the high-touch (ie voice) execution business couldn't see anything in the GSAT business even though they could use our algos to execute orders if they want to. My understanding (could be incorrect) is that their quant trading business (what they called their 'HFT' shop, although it wasn't really high-frequency compared to real HFTs like Winton, Knight, Jump, Citadel or whatever) was probably going to get shuttered as they moved out of proprietary risk-taking generally, but I don't have any information either way. In GSAT at the time, compared to others on the street our tech was pretty sophisticated intellectually but not fast (eg we didn't have ultrafast marketdata, our exchange latency was quite high and our execution algo speed was pretty slow) and so we had to do a lot of smart coding to prevent ourselves being ripped off by actual HFTs given they could move so much faster than we could. There's a lot more to HFT than reg NMS by the way, I was working in London, so we did all the GSAT trading on European exchanges none of which has anything crazy like reg NMS and there was still HFT shenanigans of various kinds that people would try (eg timing arbitrages if they could see that you had different execution speeds on different venues etc).
- known 7y ago
  Yes https://en.wikipedia.org/wiki/Chinese_wall https://en.wikipedia.org/wiki/Chinese_wall
  - dopamean 7y ago
    The concept of the Chinese wall is not really relevant to this kind of conflict of interest.
    - FabHK 7y ago
      Yeah, this here is all on the public side of the Chinese wall.
- anonu 7y ago
  "Doing HFT" is not a thing... it's just called trading. With computer automation, trading by definition becomes high-frequency. The better distinction is whether those trades are on a principal or agency basis.
- zjaffee 7y ago
  It depends on what you mean by HFT, if you mean prop trading, that was made illegal by Dodd Frank for large cap businesses to engage in with investor funds. If you mean market making HFT (which some prop firms also do), that's what this article is about.
drharby 7y ago
Why did you leave gset?

jfengel 7y ago

Does GS do HFT itself? Is there a conflict of interest?

seanhunter 7y ago
I'm not a current employee, but at the time that I was, they did have a small unit who did pseudo-HFT on a prop basis and various electronic market-making businesses, but they were all firewalled off from the people who did brokerage business. We didn't share code or information with them and for obvious reasons they had no ability to view client order flow, unexecuted orders etc. Likewise people in the high-touch (ie voice) execution business couldn't see anything in the GSAT business even though they could use our algos to execute orders if they want to. My understanding (could be incorrect) is that their quant trading business (what they called their 'HFT' shop, although it wasn't really high-frequency compared to real HFTs like Winton, Knight, Jump, Citadel or whatever) was probably going to get shuttered as they moved out of proprietary risk-taking generally, but I don't have any information either way. In GSAT at the time, compared to others on the street our tech was pretty sophisticated intellectually but not fast (eg we didn't have ultrafast marketdata, our exchange latency was quite high and our execution algo speed was pretty slow) and so we had to do a lot of smart coding to prevent ourselves being ripped off by actual HFTs given they could move so much faster than we could. There's a lot more to HFT than reg NMS by the way, I was working in London, so we did all the GSAT trading on European exchanges none of which has anything crazy like reg NMS and there was still HFT shenanigans of various kinds that people would try (eg timing arbitrages if they could see that you had different execution speeds on different venues etc).
known 7y ago
Yes https://en.wikipedia.org/wiki/Chinese_wall https://en.wikipedia.org/wiki/Chinese_wall
- dopamean 7y ago
  The concept of the Chinese wall is not really relevant to this kind of conflict of interest.
  - FabHK 7y ago
    Yeah, this here is all on the public side of the Chinese wall.
anonu 7y ago
"Doing HFT" is not a thing... it's just called trading. With computer automation, trading by definition becomes high-frequency. The better distinction is whether those trades are on a principal or agency basis.
zjaffee 7y ago
It depends on what you mean by HFT, if you mean prop trading, that was made illegal by Dodd Frank for large cap businesses to engage in with investor funds. If you mean market making HFT (which some prop firms also do), that's what this article is about.

drharby 7y ago

Why did you leave gset?