>>The social justice / millenial part of me hates this for being funded by high frequency trading, of all things. What a colossal waste of resources.
HFT makes the market more efficient, just like the AI eliminating jobs makes business more efficient. It's been numbing watching HN gladly sacrifice it's own to the altar of AI over and over. There is no moral high ground.
Personally as a retail quant, it's really rewarding to build models that extract edge from the market using the very AI tools that have eliminated all hope of ever re-entering the tech-field absent being an entrepreneurial founder.
i remember trading a us stock twenty years ago, i don't live in the us, i used a discount broker, the flat commission was something like $20+percentage of trade. this was significantly after there had apparently a massive drop in costs.
there is some kind of amnesia that exists with things that used to cost massive amounts but are now close to free. it is just not possible to explain to someone that in the recent past, most people were just unable to own stocks because of costs.
HFT isn't necessary for cheap online trading. You can have bulk transactions execute once per day for very low cost and that's good enough for an efficient market. Companies spending billions to beat other bidders by milliseconds is just rent extraction with computers.
it isn't good enough for an efficient market. this is a common idea amongst people who have never traded. if it was possible to trade this way, it would happen already. this is how some non-equity markets trade. equities do not trade this way because people do not want it. the system we already have has ludicrously low costs.
No, it's because people who stand to make money off it want it.
Society is full of examples of things that people want and that would save money and make a lot of sense that are blocked by people rent seeking off the status quo. Free tax filing provided by the government is one particularly obvious example.
"Do it better" doesn't work for monopolies. A company offering trades at lower intervals doesn't work when the NYSE etc. controls the actual platform, the minimum fees, the granularity of transactions, etc.
The core problem is that large numbers of people trade for effectively no good reason. Because of HFT, these people are now less screwed than they were previously. The "house" is competitive.
Yes, it's a profitable business for HFT. I'm not too bothered by that.
If you want to direct your ire somewhere, direct it at companies like Robinhood that are gamifying financial markets.
Things are a bit cheaper. It's pretty diffuse, but then so are the supposed harms they perpetrate as well. HFT is realistically a tiny part of modern finance. Huge numbers of professional traders made in total much more money doing the same job before it was automated.
As I understand it, liquidity requires buyers, so middlemen (HFT) with a smaller spread than traditional brokers (because of speed and volume) might increase the number of buyers slightly. I'd like to see quantification for this oft-repeated claim of "increased liquidity", which seems fairly marginal at this point.
Strong disagree. Liquidity at the level of milliseconds means insider trading and other information disparity is more profitable and encourages people to make rash decisions on incomplete information rather than well informed decision.
I'd love go see any information that proves that trades at the millisecond level lead to measurable improvements over, say, trades executing once per hour.
They seem to lead to measurable improvements for HFT companies, who seem to benefit from incrementally faster information and execution, and high volume (which might be reduced if trades were hourly.)
It might be harder for HFT to make money if trades were processed in random order on the hour, though they would probably still have an edge.
Online games that care about fairness try not to turn into a competition for the lowest ping time.
Good outcomes for HFT companies doesn't mean good outcomes for the market.
The government abandoning free tax filing software is GREAT for Intuit - they make a lot of money off it. It's awful for the rest of the population and the country as a whole.
HFT makes the market more efficient, just like the AI eliminating jobs makes business more efficient. It's been numbing watching HN gladly sacrifice it's own to the altar of AI over and over. There is no moral high ground.
Personally as a retail quant, it's really rewarding to build models that extract edge from the market using the very AI tools that have eliminated all hope of ever re-entering the tech-field absent being an entrepreneurial founder.