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Long before HFT firms, we had Market Makers -- they were often a separate department of the brokerage firm you were already using. Therefore, Markets don't nee
by buck4roo 6y ago
Long before HFT firms, we had Market Makers -- they were often a separate department of the brokerage firm you were already using.
Therefore, Markets don't need HFT firms to provide this service, they simply coopted a friendly-sounding rationale in an attempt to dismiss skeptics.
- rblatz 6y agoAnd we all benefit through lower bid/ask spreads
- pgwhalen 6y ago"Market maker" refers to a "role" in a market. HFT is simply one way that role is fulfilled, in some markets (equities, futures, ...) but perhaps not others (corporate bonds, MBS, ...). No market needs HFTs to provide the service, but they exist because in those markets they provide a monumentally better (cheaper) service than their predecessors.
- rcxdude 6y agoYou don't need HFT, but those market makers lost to HFT on price. HFT is far far cheaper than the old market makers.