4 ms·

> You see 0 value to the latency arms race, and I think you are probably right. How do you draw the line between investments in reduced latency which are socia

> You see 0 value to the latency arms race, and I think you are probably right. How do you draw the line between investments in reduced latency which are socially beneficial, and those which aren't? It's not like these are cheap investments that HFT firms are making. If they're truly pointless, we should expect them to lead to overcapacity and ultimately the exit of some players (unless, of course, the arms race is being unnaturally subsidized in some way, e.g. by the lack of a sub-penny rule). When Paul Reuter was using carrier pigeons and telegraphs to move tradeable information between stock exchanges ahead of his competitors, I wonder if people considered this an arms race of negligible social value. After all, the world had gotten by just fine without telegraphs up until then.

dllthomas 13y ago
Meaningful stuff could happen in the elapsed time, so motivating people to get info there sooner was more valuable. As someone who's working in HFT, I think that the surface defined by a given expenditure in (expenditure on price accuracy)x(expenditure on speed)x(profitability) space, the gradient points too far toward speed on too much of the surface.
cma 13y ago
Saying something that is such a zero-sum waste is great because as a side effect it brought us the telegraph is like saying government bureaucracy is great because firms have had to develop new technologies that happen to be useful in other domains in order to deal with it.
jellicle 13y ago
> If they're truly pointless You've conflated "value to society" with "potential to make money". The two are unrelated. Dumping toxic waste in the river may make money, but has negative societal value. Whatever societal value there was to faster trading was exceeded when trades could execute by the time your browser refreshed. Humans make financial decisions on the scale of minutes at fastest. At this point HFTs are still pursuing "making money" (and there may still be money to be made) but certainly not providing any societal value whatsoever; since they are stealing from the general public their societal value is strongly negative.

dllthomas 13y ago

Meaningful stuff could happen in the elapsed time, so motivating people to get info there sooner was more valuable. As someone who's working in HFT, I think that the surface defined by a given expenditure in (expenditure on price accuracy)x(expenditure on speed)x(profitability) space, the gradient points too far toward speed on too much of the surface.

cma 13y ago

Saying something that is such a zero-sum waste is great because as a side effect it brought us the telegraph is like saying government bureaucracy is great because firms have had to develop new technologies that happen to be useful in other domains in order to deal with it.

jellicle 13y ago

> If they're truly pointless You've conflated "value to society" with "potential to make money". The two are unrelated. Dumping toxic waste in the river may make money, but has negative societal value. Whatever societal value there was to faster trading was exceeded when trades could execute by the time your browser refreshed. Humans make financial decisions on the scale of minutes at fastest. At this point HFTs are still pursuing "making money" (and there may still be money to be made) but certainly not providing any societal value whatsoever; since they are stealing from the general public their societal value is strongly negative.