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All these HFT stuff reminds me of chinese event where people send each other gift money as a good will gesture. Revenue is high but no meaningful transaction ha

All these HFT stuff reminds me of chinese event where people send each other gift money as a good will gesture. Revenue is high but no meaningful transaction has happened. The money is just being exchanged between the same top HFT firms. And the best of our minds are fighting it out in the arena of algorithms rather than creating real world value.

gruez 2y ago
>Revenue is high but no meaningful transaction has happened. The money is just being exchanged between the same top HFT firms. And the best of our minds are fighting it out in the arena of algorithms rather than creating real world value. Liquidity is "real world value". Being able to buy/sell a stock instantly without a massive premium/discount makes stock ownership for the average person possible. Contrast this to an liquid market, like buying houses, where you need to spend months house hunting, and pay a 6% commission on top.
- nthingtohide 2y ago
  https://www.ecb.europa.eu/press/research-publications/resbull/2020/html/ecb.rb201215~210477c6b0.en.html https://www.ecb.europa.eu/press/research-publications/resbul... Conclusions and policy implications To return to our initial question: does stock market liquidity deteriorate when HFTs compete? The results suggest that competition among HFTs increases speculative high-frequency trades, which could lead to a deterioration in market liquidity.
  - gruez 2y ago
    Taking the study at face value, it only says that competition among HFT is bad. It also specifically admits that "As market-makers, they can update their price quotes fast when news arrives and provide liquidity to the market. In this case, the low-frequency traders in the market – the investors – benefit from lower transaction costs". In other words, at best it's advocating for some sort of monopoly for HFT, rather than getting rid of HFTs entirely.

gruez 2y ago

>Revenue is high but no meaningful transaction has happened. The money is just being exchanged between the same top HFT firms. And the best of our minds are fighting it out in the arena of algorithms rather than creating real world value. Liquidity is "real world value". Being able to buy/sell a stock instantly without a massive premium/discount makes stock ownership for the average person possible. Contrast this to an liquid market, like buying houses, where you need to spend months house hunting, and pay a 6% commission on top.

nthingtohide 2y ago
https://www.ecb.europa.eu/press/research-publications/resbull/2020/html/ecb.rb201215~210477c6b0.en.html https://www.ecb.europa.eu/press/research-publications/resbul... Conclusions and policy implications To return to our initial question: does stock market liquidity deteriorate when HFTs compete? The results suggest that competition among HFTs increases speculative high-frequency trades, which could lead to a deterioration in market liquidity.
- gruez 2y ago
  Taking the study at face value, it only says that competition among HFT is bad. It also specifically admits that "As market-makers, they can update their price quotes fast when news arrives and provide liquidity to the market. In this case, the low-frequency traders in the market – the investors – benefit from lower transaction costs". In other words, at best it's advocating for some sort of monopoly for HFT, rather than getting rid of HFTs entirely.