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I applaud Lewis' effort and maybe it will sink in this time, but this is not really news for a lot of people. The story is that Wall Street big powerful tradin

by socrates1998 13y ago

I applaud Lewis' effort and maybe it will sink in this time, but this is not really news for a lot of people. The story is that Wall Street big powerful trading firms have an inside edge against retail (middle class) customers. It's not exactly new. This has been happening for decades. They did it before computers with information, now they are doing it with fiber cable.

mhb 13y ago
If they're using their edge to reduce the bid/ask spread of the retail customers to a penny instead of the 25 cents or more that it used to be, how is that hurting retail customers?
- deleted 13y ago
  [deleted]
- doktrin 13y ago
  Are you referring to decimalization? If so, that doesn't really have any direct relation with HFT. The NYSE famously used to list prices in fractions of 1/8th, and converted to the decimal system around 2001. edit : coolio, I misunderstood the parent's comment.
  - yummyfajitas 13y ago
    No, he's referring to the lower bid/ask spread that HFTs cause. http://qed.econ.queensu.ca/pub/faculty/milne/322/IIROC_FeeChange_submission_KM_AP3.pdf http://qed.econ.queensu.ca/pub/faculty/milne/322/IIROC_FeeCh...
    - firebones 13y ago
      Related, how do you feel about sub-penny slicing as mentioned here: http://www.nanex.net/aqck2/3519.html http://www.nanex.net/aqck2/3519.html I wish there were more debates between HFT/exchange folks with Hunsader out there because I think it would be illuminating. Both sides seem to stand on their soapboxes and shout, but never truly debate the details.
      - yummyfajitas 13y ago
        That's a weird article. Nanex of all people is complaining that people are jumping ahead of HFT with negligible price improvements, making the hfts investment in low latency useless. I mean they pretend its about retail, but the people who lose from subpenny trades are hfts. That's who investor b is, most likely - the fastest HFT. Personally I believe we should re-decimalize - allow quotes at 0.01 cents. This will induce HFT to focus less on latency and more on price improvement.
- asdfologist 13y ago
  No one is arguing that all HFT firms are bad. But the ones who give kickbacks to exchanges to fulfill orders at worse prices aren't doing anybody a service.
- MikeCapone 13y ago
  If that was all they were doing, that'd be fine. But read the book. Some exchanges have 150 types of orders that are mostly undocumented and unknown to most regular players, created specifically so that HFT can not do what they publicly appear to be doing, or take incentives without providing liquidity, etc. The public price that everybody seems is outdated compared to the private prices that HFTers see, so they can risklessly front-run people because they already know if a price has dropped or rise, etc. All that stuff isn't just fast market-making.
  - NkVczPkybiXICG 13y ago
    Undocumented? http://cdn.batstrading.com/resources/membership/BATS_FIX_Specification.pdf http://cdn.batstrading.com/resources/membership/BATS_FIX_Spe... The "public price that everyone else sees" is the same price as the HFTs see. These are available on the direct feeds from the various exchanges, and there's no discrimination against non-HFTs. Anyone who pays for it can get it. It's an equivalent advantage to having a Bloomberg - more data, faster.
    - MikeCapone 13y ago
      It isn't. The SIP is much slower than what the HFTers can put together. Read the book, it's in there.
doktrin 13y ago
> this is not really news for a lot of people. As a counterpoint, the fact that the NSA was monitoring electronic communication wasn't "news" either. Shifts in opinion and popular consciousness is often times a matter of momentum & critical mass. This book will probably do more to stimulate popular interest in this issue than just about anything that's come before it. As a side note, I'm currently reading Flash Boys and have previously read Dark Pools. So far, I would definitely consider the Lewis book to be the better of the two.
deleted 13y ago
[deleted]

mhb 13y ago

If they're using their edge to reduce the bid/ask spread of the retail customers to a penny instead of the 25 cents or more that it used to be, how is that hurting retail customers?

deleted 13y ago
[deleted]
doktrin 13y ago
Are you referring to decimalization? If so, that doesn't really have any direct relation with HFT. The NYSE famously used to list prices in fractions of 1/8th, and converted to the decimal system around 2001. edit : coolio, I misunderstood the parent's comment.
- yummyfajitas 13y ago
  No, he's referring to the lower bid/ask spread that HFTs cause. http://qed.econ.queensu.ca/pub/faculty/milne/322/IIROC_FeeChange_submission_KM_AP3.pdf http://qed.econ.queensu.ca/pub/faculty/milne/322/IIROC_FeeCh...
  - firebones 13y ago
    Related, how do you feel about sub-penny slicing as mentioned here: http://www.nanex.net/aqck2/3519.html http://www.nanex.net/aqck2/3519.html I wish there were more debates between HFT/exchange folks with Hunsader out there because I think it would be illuminating. Both sides seem to stand on their soapboxes and shout, but never truly debate the details.
    - yummyfajitas 13y ago
      That's a weird article. Nanex of all people is complaining that people are jumping ahead of HFT with negligible price improvements, making the hfts investment in low latency useless. I mean they pretend its about retail, but the people who lose from subpenny trades are hfts. That's who investor b is, most likely - the fastest HFT. Personally I believe we should re-decimalize - allow quotes at 0.01 cents. This will induce HFT to focus less on latency and more on price improvement.
asdfologist 13y ago
No one is arguing that all HFT firms are bad. But the ones who give kickbacks to exchanges to fulfill orders at worse prices aren't doing anybody a service.
MikeCapone 13y ago
If that was all they were doing, that'd be fine. But read the book. Some exchanges have 150 types of orders that are mostly undocumented and unknown to most regular players, created specifically so that HFT can not do what they publicly appear to be doing, or take incentives without providing liquidity, etc. The public price that everybody seems is outdated compared to the private prices that HFTers see, so they can risklessly front-run people because they already know if a price has dropped or rise, etc. All that stuff isn't just fast market-making.
- NkVczPkybiXICG 13y ago
  Undocumented? http://cdn.batstrading.com/resources/membership/BATS_FIX_Specification.pdf http://cdn.batstrading.com/resources/membership/BATS_FIX_Spe... The "public price that everyone else sees" is the same price as the HFTs see. These are available on the direct feeds from the various exchanges, and there's no discrimination against non-HFTs. Anyone who pays for it can get it. It's an equivalent advantage to having a Bloomberg - more data, faster.
  - MikeCapone 13y ago
    It isn't. The SIP is much slower than what the HFTers can put together. Read the book, it's in there.

doktrin 13y ago

> this is not really news for a lot of people. As a counterpoint, the fact that the NSA was monitoring electronic communication wasn't "news" either. Shifts in opinion and popular consciousness is often times a matter of momentum & critical mass. This book will probably do more to stimulate popular interest in this issue than just about anything that's come before it. As a side note, I'm currently reading Flash Boys and have previously read Dark Pools. So far, I would definitely consider the Lewis book to be the better of the two.

deleted 13y ago

[deleted]