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It's always the same bullshit excuse: "providing liquidity". It's just that you pretty much need to be another HFT bot to partake in that liquidity.
by white_devil 14y ago
It's always the same bullshit excuse: "providing liquidity". It's just that you pretty much need to be another HFT bot to partake in that liquidity.
- lrem 14y agoFrom what I understood, this contribution is not about making stuff nanoseconds faster, but about how this pushes spreads down. Anyone doing any trading will be happier to see the spreads smaller, wouldn't he? Note: by spreads I mean the difference between buy and sell prices. I don't know if there is a special word for it in this context.
- AnIrishDuck 14y agoExactly. HFT reduces counterparty risk for market makers (because with HFT, it's much more likely that there will be a counterparty for any given trade). This enables the market makers to reduce their bid-ask spreads; the profit from the bid-ask spread is what covers the risk a market maker faces from their market clearing obligations.
- mcguire 14y agoDo you know of any data on the size of the spreads over time?