3 ms·
Wtf? An example of latency arbitrage is say, two identical fungible securities listed on different exchanges. An order arrives causing the price on one exchan
by gd1 13y ago
Wtf? An example of latency arbitrage is say, two identical fungible securities listed on different exchanges. An order arrives causing the price on one exchange (A) to spike up (the event), you react after that event and buy the security on the other exchange (B). You reacted fastest to public knowledge.
Front running would be if you were say sitting on a broker desk and one of your clients rang up and said to buy lots of A. Then you put in your own buy order before the clients one hits the market. That is front-running. You got in before that knowledge become public. Do you see the difference?
- 001sky 13y agoAn example of latency arbitrage is... Arbitrage requires that you cross the trade. You've merely described a following Algorithm. One that leaves open long positions.
- gd1 13y agoAnd you've merely tried to change the subject. Something can't be front-running if it happens after a publicly disseminated market event. Understood? Flash orders = front running. Trading ahead of client flow = front running. Latency arbitrage != front running. HFT market making != front running.