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> They provide faster and more cost efficient liquidity, thus "bringing down the spread" which will push out maybe not all but certainly the lesser privileged c

by toth 3y ago

> They provide faster and more cost efficient liquidity, thus "bringing down the spread" which will push out maybe not all but certainly the lesser privileged conventional traders. This is foremost negative for the effected traders and not per se for the public but as the pessimist that i am, i cannot help it but see it as just another way of market consolidation, of monopolization in the worst case. They are only "pushing out" other liquidity providers. If you are a medium/long term investor you are not competing with HFTs. Yes, if you want to be day trader HFTs might make your life harder, but I think from society's point of view that's fine. > The only way to seriously compete with such HFTs, is to do it as they do, which requires the same physical accesses to the markets. Previously, the access to valuable (insider) information was a privilege for slow traders and a way to get an edge. Speed and algorithms are imo just a new privilege, enabled by technology. > The simple reason why insider trading is illegal, because it puts other marketeers at a disadvantage, they have no means to compensate. The same is true for HFT. You cannot rent the rack next to the markets machines when its already occupied. There is no principle that all market participants must been on equal footing. That would be impossible to enforce, and counterproductive to boot. If you are a slow (non HFT) trader at a big fund or bank you also have a lot of advantages over a guy doing it from home: better financing rates, more market access, a whole infrastructure to provide you with information and analysis, etc. Should that be made illegal as well? What about if you are just a better trader? Should you be somehow given a handicap so others can compete with you? As I said in another reply, in every field of human activity, professionals are advantaged over hobbyists, and that's fine.

throwawayqqq11 3y ago
> What about if you are just a better trader? If it was _only_ human ability / trade craft, that makes good traders (hft or conventional), imo those traders would have earned their cut. Honoring such a market making service and economic foresight with profits is reasonable for the public. Unfortunately, the difference between a good trader and a successfull one is not ability alone but privilege! Be it insider information or better latency, its the same thing here! > There is no principle that all market participants must been on equal footing. This statement is objectively false, when you take "equal footing" as "equal access". > in every field of human activity, professionals are advantaged over hobbyists, and that's fine. The gap between professionals and hobbyists is the same between professionals and customers, its the main reason of trustee obligations / market regulations. So something about this issue is not fine. My point is, privileged market access leads to growing power asymmetries, which a newcomer can never compensate with genius abilities alone. This kind of market capture is similar to institutionalized corruption btw. Once a vital service provider gets too dominant or the power gap gets too wide, regulators must step in. See health care (medical complexity), legal systems (cost of equal representation) or basically all infrastructure (obligation of contracting). ... I replied to your stronghold statements, didnt i? Now, is HFT just a client side approach of front running? Which is an insider privilege and illegal. https://en.m.wikipedia.org/wiki/Frontrunning https://en.m.wikipedia.org/wiki/Frontrunning
- toth 3y ago
  > Unfortunately, the difference between a good trader and a successfull one is not ability alone but privilege! Be it insider information or better latency, its the same thing here! > The gap between professionals and hobbyists is the same between professionals and customers, its the main reason of trustee obligations / market regulations. So something about this issue is not fine. > My point is, privileged market access leads to growing power asymmetries, which a newcomer can never compensate with genius abilities alone. This kind of market capture is similar to institutionalized corruption btw. And my point is that you are holding trading to a different standard. Is it a problem that Apple has so many resources that a hobbyist has no chance of competing with at making smartphones? Or Google and search engines, Chipotle and burritos, etc? Of course not. Those companies have earned their market shares by investing in the right places, innovating, good strategy, etc. Same is true for HFT firms. There would be a problem if either Apple or Citadel had a monopoly or was breaking the law. If there's proof that's the case, we have courts and regulators to step in. > I replied to your stronghold statements, didnt i? > Now, is HFT just a client side approach of front running? Which is an insider privilege and illegal. According to the legal definition, front running is when you have orders you are executing for clients and you trade ahead of them on your own account. HFTs do not have client orders, ergo they cannot possibly front run anything. If you use some expanded definition of front running, then it depends on the details of the definition. For some sufficiently broad definitions, probably yes. But then it's of course not illegal and possibly not even bad.
  - throwawayqqq11 3y ago
    > But then it's of course not illegal and possibly not even bad. Unless regulations apply or no monopoly emerges. I guess i dont trust institutions or companie as you do. To end it on a different upside. To some degre, your company and eg amazon are realizing cybernetic socialism . With enough trust, we could regulatorily capture the whole thing ;) I agreed to your point. > "pushing out" other liquidity providers. [… is fine ] from society's point of view. Thank you for the conversation.
    - toth 3y ago

by toth 3y ago

throwawayqqq11 3y ago

> What about if you are just a better trader? If it was _only_ human ability / trade craft, that makes good traders (hft or conventional), imo those traders would have earned their cut. Honoring such a market making service and economic foresight with profits is reasonable for the public. Unfortunately, the difference between a good trader and a successfull one is not ability alone but privilege! Be it insider information or better latency, its the same thing here! > There is no principle that all market participants must been on equal footing. This statement is objectively false, when you take "equal footing" as "equal access". > in every field of human activity, professionals are advantaged over hobbyists, and that's fine. The gap between professionals and hobbyists is the same between professionals and customers, its the main reason of trustee obligations / market regulations. So something about this issue is not fine. My point is, privileged market access leads to growing power asymmetries, which a newcomer can never compensate with genius abilities alone. This kind of market capture is similar to institutionalized corruption btw. Once a vital service provider gets too dominant or the power gap gets too wide, regulators must step in. See health care (medical complexity), legal systems (cost of equal representation) or basically all infrastructure (obligation of contracting). ... I replied to your stronghold statements, didnt i? Now, is HFT just a client side approach of front running? Which is an insider privilege and illegal. https://en.m.wikipedia.org/wiki/Frontrunning https://en.m.wikipedia.org/wiki/Frontrunning

toth 3y ago
> Unfortunately, the difference between a good trader and a successfull one is not ability alone but privilege! Be it insider information or better latency, its the same thing here! > The gap between professionals and hobbyists is the same between professionals and customers, its the main reason of trustee obligations / market regulations. So something about this issue is not fine. > My point is, privileged market access leads to growing power asymmetries, which a newcomer can never compensate with genius abilities alone. This kind of market capture is similar to institutionalized corruption btw. And my point is that you are holding trading to a different standard. Is it a problem that Apple has so many resources that a hobbyist has no chance of competing with at making smartphones? Or Google and search engines, Chipotle and burritos, etc? Of course not. Those companies have earned their market shares by investing in the right places, innovating, good strategy, etc. Same is true for HFT firms. There would be a problem if either Apple or Citadel had a monopoly or was breaking the law. If there's proof that's the case, we have courts and regulators to step in. > I replied to your stronghold statements, didnt i? > Now, is HFT just a client side approach of front running? Which is an insider privilege and illegal. According to the legal definition, front running is when you have orders you are executing for clients and you trade ahead of them on your own account. HFTs do not have client orders, ergo they cannot possibly front run anything. If you use some expanded definition of front running, then it depends on the details of the definition. For some sufficiently broad definitions, probably yes. But then it's of course not illegal and possibly not even bad.
- throwawayqqq11 3y ago
  > But then it's of course not illegal and possibly not even bad. Unless regulations apply or no monopoly emerges. I guess i dont trust institutions or companie as you do. To end it on a different upside. To some degre, your company and eg amazon are realizing cybernetic socialism . With enough trust, we could regulatorily capture the whole thing ;) I agreed to your point. > "pushing out" other liquidity providers. [… is fine ] from society's point of view. Thank you for the conversation.
  - toth 3y ago