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The market exists the benefit for the 'buyside' e.g. people who own stock, not for the benefit of the middlemen like exchanges and HFT marketmakers. You may no

The market exists the benefit for the 'buyside' e.g. people who own stock, not for the benefit of the middlemen like exchanges and HFT marketmakers. You may not like homeowners and think some of them are or should be convicted, but it's ridiculous to say someone is 'shilling for homeowners' when they point out that real estate brokers are overpaid and skimming. Some more balanced discussion - http://streetwiseprofessor.com/?p=8333 http://streetwiseprofessor.com/?p=8333 http://blogmaverick.com/2014/04/03/the-idiots-guide-to-high-frequency-trading/ http://blogmaverick.com/2014/04/03/the-idiots-guide-to-high-... http://blogs.hbr.org/2014/04/high-frequency-trading-threat-or-menace/ http://blogs.hbr.org/2014/04/high-frequency-trading-threat-o... In a nutshell, people who run big portfolios don't want to give away information about what they're doing, and they don't want HFT types to be able to pay exchanges to get first crack at front-running them. On the other hand there is a legitimate market-making function, and there's a tradeoff between transparent markets and forcing people to share info that lets other people trade against them.

RockyMcNuts 13y ago
this guy said it better than me - https://news.ycombinator.com/item?id=7546768 https://news.ycombinator.com/item?id=7546768
drcode 13y ago
> people who run big portfolios don't want to give away information about what they're doing... Then people shouldn't be investing in these poorly-performing portfolios and use other portfolio managers who are more savvy. These people act like this stuff is MP (my problem, as an average person) whereas it's obviously YP (your problem, Mr. portfolio manager)
harryh 13y ago
Yes, some big portfolio guy wants to be able to sell 50M worth of some stock without the price dropping. But what if you were buying stock at the same time? Wouldn't you want that information about that rise in supply to be detected and priced into the market as fast as possible?
tptacek 13y ago
The buy-side is buying liquidity. The sell-side is selling it. That's basically what the terms mean. It's not particularly meaningful to say that the market exists "for" the buy-side. The real estate market exists for the real estate buy-side, too. But it takes 5 months to sell a house, because nobody is selling liquidity; instead, you have to work through an ineffectual sell-side agent who takes tens of thousands of dollars out of your hide for the privilege.
- RockyMcNuts 13y ago
  no, the buy side is long. the sell side is selling things like IPOs, etc. that the buy side might want to buy. sometimes they provide liquidity, sometimes they're just an agent and rent-seeker. markets, trades, liquidity are a means to an end, not an end in themselves. every trade is a friction and a cost, and only happens because the two sides aren't happy with their portfolio. "more friction in your machine is generally bad and just creates heat." "oh, but that's not meaningful, people who make sandpaper and grippy tires are needed to create friction" "..."
  - tptacek 13y ago
    The buy-side does not become the sell-side when it tries to exit a position. Buy-side: mutual fund. Sell-side: market maker.
  - harryh 13y ago
    Your uses of the terms "buy-side" and "sell-side" do not conform to how the financial community (of which the author of this blog post is a member) uses them. It's not the buying vs selling of securities. It's the buying vs selling of financial services (of which liquidity is one).
    - RockyMcNuts 13y ago
      Your definition is probably better but I wouldn't expect more than 20% of people in the industry to define it correctly that way. (and the buy side is selling financial services to someone too...the buy side holds portfolios of securities, sell side makes money generating transactions...distinction can get quite arbitrary when you have buy side strategies that involve lots of transactions and selling liquidity) bottom line is... greasing the wheels of commerce good, making wonky wheels so some goofball can sell more grease services bad.
deleted 13y ago
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RockyMcNuts 13y ago

this guy said it better than me - https://news.ycombinator.com/item?id=7546768 https://news.ycombinator.com/item?id=7546768

drcode 13y ago

> people who run big portfolios don't want to give away information about what they're doing... Then people shouldn't be investing in these poorly-performing portfolios and use other portfolio managers who are more savvy. These people act like this stuff is MP (my problem, as an average person) whereas it's obviously YP (your problem, Mr. portfolio manager)

harryh 13y ago

Yes, some big portfolio guy wants to be able to sell 50M worth of some stock without the price dropping. But what if you were buying stock at the same time? Wouldn't you want that information about that rise in supply to be detected and priced into the market as fast as possible?

tptacek 13y ago

The buy-side is buying liquidity. The sell-side is selling it. That's basically what the terms mean. It's not particularly meaningful to say that the market exists "for" the buy-side. The real estate market exists for the real estate buy-side, too. But it takes 5 months to sell a house, because nobody is selling liquidity; instead, you have to work through an ineffectual sell-side agent who takes tens of thousands of dollars out of your hide for the privilege.

RockyMcNuts 13y ago
no, the buy side is long. the sell side is selling things like IPOs, etc. that the buy side might want to buy. sometimes they provide liquidity, sometimes they're just an agent and rent-seeker. markets, trades, liquidity are a means to an end, not an end in themselves. every trade is a friction and a cost, and only happens because the two sides aren't happy with their portfolio. "more friction in your machine is generally bad and just creates heat." "oh, but that's not meaningful, people who make sandpaper and grippy tires are needed to create friction" "..."
- tptacek 13y ago
  The buy-side does not become the sell-side when it tries to exit a position. Buy-side: mutual fund. Sell-side: market maker.
- harryh 13y ago
  Your uses of the terms "buy-side" and "sell-side" do not conform to how the financial community (of which the author of this blog post is a member) uses them. It's not the buying vs selling of securities. It's the buying vs selling of financial services (of which liquidity is one).
  - RockyMcNuts 13y ago
    Your definition is probably better but I wouldn't expect more than 20% of people in the industry to define it correctly that way. (and the buy side is selling financial services to someone too...the buy side holds portfolios of securities, sell side makes money generating transactions...distinction can get quite arbitrary when you have buy side strategies that involve lots of transactions and selling liquidity) bottom line is... greasing the wheels of commerce good, making wonky wheels so some goofball can sell more grease services bad.

deleted 13y ago

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