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I think you would still end up with races, they'd just move around. IEX's "speed bump" was just marketing and didn't really matter to actual HFTs. Plus, some o

I think you would still end up with races, they'd just move around. IEX's "speed bump" was just marketing and didn't really matter to actual HFTs. Plus, some of it is unavoidable if you don't have a single unified exchange. Where there's latency, there's inefficiencies, and where there's inefficiency, there's profit to be made. And competition among exchanges is healthy for the ecosystem, so I don't think we'd want to consolidate. And lastly, HFT has consolidated so much that I don't think it's worth worrying about. Virtu literally switched sides and make most of their money on order execution. Industry-wide, HFT revenues are down like 80% over the last 5-8 years. Between wholesaling/PFOF taking non-toxic order flow off the lit exchanges, and banks finally wising up on not being pants-on-head about their order execution, it's literally just sharks in the pool now, there's not even any water.

HWR_14 3y ago
Why is competition among exchanges a good thing? Why not a single, very regulated, exchange which serves as a neutral playing field?
- tick_tock_tick 3y ago
  Single point of failure is a simple justification right off the top of my head. What happens if you have a critical failure that brings down an exchange for several days?
  - quickthrower2 3y ago
    As a counter I had some VW shares I couldn’t access for 6 months because they were moved to another exchange. 20 calls to the broker to find out what had even happened. Eventually I was able to sell them.
    - tomcam 3y ago
      Well, your first problem was investing in VW (KIDDING!). But seriously, I usually stick to self-serve stock purchases. Was this a situation where you had to contact a human to make the buy in the first place, or was it that you bought it yourself, then VW changed up their infrastructure and inadvertently locked you out? Shitty situation either way.
      - quickthrower2 3y ago
        Self serve, one one of those trading sites. No human contact, until the site wouldn’t let me trade the shares. I think the exchange changed up things and I am buying from another country so communication issues etc.
        tomcam 3y ago
        That feels like a gross violation of their fiduciary responsibility. Major bummer.
    - TheAlchemist 3y ago
      What do you mean « moved to another exchange » ? Shares are not held at an exchange.
      - quickthrower2 3y ago
        No idea. I don’t know technically what is meant by this.
        TheAlchemist 3y ago
        Well, technically it’s false, so nothing :)
        quickthrower2 3y ago
        I checked my email history on it. There isn't much but from what I can tell the exchange was changed that they were traded on but there was also a change in back-end broker and there was a delay of them moving the shares to the new back-end broker. So maybe the change of exchange wasn't the actual reason, just a coincidence.
  - HWR_14 3y ago
    If the NYSE went down, wouldn't most trading stop because of people being frightened about using old mismatched prices? Besides, when has an exchange gone done for hours, let alone days? Absent intentional breaks in trading as speedbumps.
    - chollida1 3y ago
      > If the NYSE went down, wouldn't most trading stop because of people being frightened about using old mismatched prices? Why would you assume that. Every exchange is a valid place to trade and the sip ensures you always have the correct NBBO
      - HWR_14 3y ago
        I assumed that some exchange provides enough volume that without it there would be worries that you aren't getting true price discovery. Isn't that a concern with low trading volume? Not that that would necessarily be true, but there would be enough concern to cause some people not to trade. And others to want to trade specifically with those kind of nervous people wouldn't because the people they expected to profit by were staying put. And then it would cascade.
- xoranth 3y ago
  Lower fees. Also, "exchange competition" is a thing in US stocks, but not, for example, in the futures' market. And there's HFTs in futures too, so having a single exchange wouldn't "remove" HFTs (not that you'd want to).
dchftcs 3y ago
>Virtu literally switched sides and make most of their money on order execution. That's not true according to their filings. In their filing for 2022 Q4, I see 185m from market making, and 89m from execution.

HWR_14 3y ago

Why is competition among exchanges a good thing? Why not a single, very regulated, exchange which serves as a neutral playing field?

tick_tock_tick 3y ago
Single point of failure is a simple justification right off the top of my head. What happens if you have a critical failure that brings down an exchange for several days?
- quickthrower2 3y ago
  As a counter I had some VW shares I couldn’t access for 6 months because they were moved to another exchange. 20 calls to the broker to find out what had even happened. Eventually I was able to sell them.
  - tomcam 3y ago
    Well, your first problem was investing in VW (KIDDING!). But seriously, I usually stick to self-serve stock purchases. Was this a situation where you had to contact a human to make the buy in the first place, or was it that you bought it yourself, then VW changed up their infrastructure and inadvertently locked you out? Shitty situation either way.
    - quickthrower2 3y ago
      Self serve, one one of those trading sites. No human contact, until the site wouldn’t let me trade the shares. I think the exchange changed up things and I am buying from another country so communication issues etc.
      - tomcam 3y ago
        That feels like a gross violation of their fiduciary responsibility. Major bummer.
  - TheAlchemist 3y ago
    What do you mean « moved to another exchange » ? Shares are not held at an exchange.
    - quickthrower2 3y ago
      No idea. I don’t know technically what is meant by this.
      - TheAlchemist 3y ago
        Well, technically it’s false, so nothing :)
        quickthrower2 3y ago
        I checked my email history on it. There isn't much but from what I can tell the exchange was changed that they were traded on but there was also a change in back-end broker and there was a delay of them moving the shares to the new back-end broker. So maybe the change of exchange wasn't the actual reason, just a coincidence.
- HWR_14 3y ago
  If the NYSE went down, wouldn't most trading stop because of people being frightened about using old mismatched prices? Besides, when has an exchange gone done for hours, let alone days? Absent intentional breaks in trading as speedbumps.
  - chollida1 3y ago
    > If the NYSE went down, wouldn't most trading stop because of people being frightened about using old mismatched prices? Why would you assume that. Every exchange is a valid place to trade and the sip ensures you always have the correct NBBO
    - HWR_14 3y ago
      I assumed that some exchange provides enough volume that without it there would be worries that you aren't getting true price discovery. Isn't that a concern with low trading volume? Not that that would necessarily be true, but there would be enough concern to cause some people not to trade. And others to want to trade specifically with those kind of nervous people wouldn't because the people they expected to profit by were staying put. And then it would cascade.
xoranth 3y ago
Lower fees. Also, "exchange competition" is a thing in US stocks, but not, for example, in the futures' market. And there's HFTs in futures too, so having a single exchange wouldn't "remove" HFTs (not that you'd want to).

dchftcs 3y ago

>Virtu literally switched sides and make most of their money on order execution. That's not true according to their filings. In their filing for 2022 Q4, I see 185m from market making, and 89m from execution.