4 ms·

These links are often used for executing strategies or sending information between different exchanges (a classic example being the cross-exchange arbitrage).

bluGill 6y ago
To put it more concrete, there are a number of very large companies that have their stock traded in many locations. Japan, London, and New York all have big stock exchanges (that is just what I know of without looking - if you told me those were the only 3 cities with global stock markets I'd call you a lier). If you see a big company in London trading for slightly less than the same company in New York then you should buy stock in London and see it in New York, but you need to be first - there are several others trying to do the same thing that have enough money to make the price even alone. (my guess is that we are talking about needing $10,000 in cash ready to pull this off for the biggest companies)
- bradknowles 6y ago
  This is called “arbitrage”. It takes millions and billions of dollars to play this game. Keep in mind that the majority of back-end clearing and settlement of trades in Europe is done by Euroclear [0], who reported over 27 Trillion Euros of assets under management in 2015. In the US, virtually all back-end clearing and settlement is handled by DTCC [1], who reported handling over 1.7 Quadrillion dollars worth of value in 2011. That’s the scale of the market you’re playing in when you first pretend to arbitrage. [0]: https://en.wikipedia.org/wiki/Euroclear https://en.wikipedia.org/wiki/Euroclear [1]: https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_Corporation https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_...
  - bluGill 6y ago
    True, to make money you need a ton. Sometimes you will make bad trades. Even when it works out your gross profit on the 10000 trade is 100, out of which you need to pay expenses. It isn't a place for small players, but the amount of money on an individual trade isn't much.
- alexpil 6y ago
  Not necessarily stonks, it can also be commodities (oil/etc), or currencies, or anything else. Latency arbitrage is old. Paul Julius Reuter (as in, Reuters) made his first fortune by using carrier pigeons to transmit trade data from Brussels to Aachen. Then he started a new agency and built telegraph lines. Rice traders in Japan used boats/smoke-signals/runners to transmit information between rice markets in 1700s https://digital.sandiego.edu/cgi/viewcontent.cgi?article=1112&context=sdlr https://digital.sandiego.edu/cgi/viewcontent.cgi?article=111... pages 15-22 has more examples.

bluGill 6y ago

To put it more concrete, there are a number of very large companies that have their stock traded in many locations. Japan, London, and New York all have big stock exchanges (that is just what I know of without looking - if you told me those were the only 3 cities with global stock markets I'd call you a lier). If you see a big company in London trading for slightly less than the same company in New York then you should buy stock in London and see it in New York, but you need to be first - there are several others trying to do the same thing that have enough money to make the price even alone. (my guess is that we are talking about needing $10,000 in cash ready to pull this off for the biggest companies)

bradknowles 6y ago
This is called “arbitrage”. It takes millions and billions of dollars to play this game. Keep in mind that the majority of back-end clearing and settlement of trades in Europe is done by Euroclear [0], who reported over 27 Trillion Euros of assets under management in 2015. In the US, virtually all back-end clearing and settlement is handled by DTCC [1], who reported handling over 1.7 Quadrillion dollars worth of value in 2011. That’s the scale of the market you’re playing in when you first pretend to arbitrage. [0]: https://en.wikipedia.org/wiki/Euroclear https://en.wikipedia.org/wiki/Euroclear [1]: https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_Corporation https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_...
- bluGill 6y ago
  True, to make money you need a ton. Sometimes you will make bad trades. Even when it works out your gross profit on the 10000 trade is 100, out of which you need to pay expenses. It isn't a place for small players, but the amount of money on an individual trade isn't much.
alexpil 6y ago
Not necessarily stonks, it can also be commodities (oil/etc), or currencies, or anything else. Latency arbitrage is old. Paul Julius Reuter (as in, Reuters) made his first fortune by using carrier pigeons to transmit trade data from Brussels to Aachen. Then he started a new agency and built telegraph lines. Rice traders in Japan used boats/smoke-signals/runners to transmit information between rice markets in 1700s https://digital.sandiego.edu/cgi/viewcontent.cgi?article=1112&context=sdlr https://digital.sandiego.edu/cgi/viewcontent.cgi?article=111... pages 15-22 has more examples.