4 ms·
The existence of HFT definitely is a net positive, but I think it's a tough argument to say that further latency reduction still has any real positive offshoot,
by sudosysgen 3y ago
The existence of HFT definitely is a net positive, but I think it's a tough argument to say that further latency reduction still has any real positive offshoot, so I'd say that it's now as a whole in a zero-sum regime - anyone winning, on the margin, only makes them profit as much as someone else is losing, whereas earlier you could say that tighter spreads and more liquidity helps other market participants.
- JumpCrisscross 3y ago> it's a tough argument to say that further latency reduction still has any real positive offshoot There’s an element of Feinman’s spinning, wobbling plates [1]. The problems one must solve to push latency ever lower have knock-on effects. > whereas earlier you could say that tighter spreads and more liquidity helps other market participants The guarantee of being nipped curtails entire classes of dirty behaviour. Chunking out an order is smart, but it wasn’t always done. HFT, in this model, serves an adversarial regulatory function. We also have the basic fact that, in a Ricardian sense, folks are trading with that HFT shop over their slower competitors. At some infinitesimal level, the counterparty chose (and was delivered on) that preference. [1] https://pubs.aip.org/aapt/ajp/article-abstract/75/3/240/1056339/Feynman-s-wobbling-plate?redirectedFrom=fulltext https://pubs.aip.org/aapt/ajp/article-abstract/75/3/240/1056...
- ethanbond 3y agoI don’t think someone choosing an available preference is de facto validation that the preference was made available by anything close to a globally optimal allocation of resources. Of course I’m suspicious of any system that claims to be able to globally optimize in this way, but I do think it’d be better for almost everyone if we could.