171–180 of 247 posts
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HFT on average narrows the bid offer. Retail (i.e. small) investors benefit. Human market makers lose out. Without HFT your little old lady retirement angel would be paying much more to a rapacious human market maker. The point is that it is not the end users who are getting hurt. It's the old monopoly - the human market makers. DISCLAIMER: I (was) a HUMAN market maker.
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Earlier quoted context omitted.
HFT on average narrows the bid offer. Retail (i.e. small) investors benefit. Human market makers lose out. Without HFT your little old lady retirement angel would be paying much more to a rapacious human market maker. The point is that it is not the end users who are getting hurt. It's the old monopoly - the human market makers. DISCLAIMER: I (was) a HUMAN market maker.
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Disclaimer: I work in HFT The article uses the term "front-running" incorrectly. Front-running is where a firm places their own trades ahead of trades they're placing for a client, to capitalize on the price movement that client order might generate. This is illegal. What the market makers in the article are doing isn't front-running. It's just being smart with their orders. And that's generally why HFTs cancel order…
It's worth remembering that HFTs like yourself define front-running differently than others. Others often (rightfully) feel that HFTs who engage in latency arbitrage where they take advantage that everyone else is using the NBBO (because they have to), and the NBBO is lagged, are front-running assholes who extract value without creating anything. And we refer to that thieving, predatory, value-stealing activity as 'f…
It doesn't help the conversation to start using the name of a crime to describe something that's legal but you don't like (even if you think it should be illegal, but agree it doesn't fit the legal definition of the named crime).
I don't like that back when rape and pillage on the high seas was a large threat, some copyright holders were able to convince people to start calling copyright infringement "piracy". I don't like our current tendency to over-label things as terrorism or exaggerate the role of narcotics smuggling in financing Islamic terrorism. I also don't like labeling reacting quickly to public information and reacting to expected orders as front-running. I think it's a cheap trick that harms the quality of the dialogue.
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Retirement savers are not churning their portfolios and are thus not paying anything to HFT. Not a strong argument. Making money making markets takes risk capital. i.e. Money. The money makes more money. Fact. I agree. But don't blame HFT. Blame finance. That is how finance works. I see a completely legitimate case for being anti-finance. I don't see a legitimate case for being anti-HFT only. Indeed, the opposite, if…
Retirement savers are losing a cut of every paycheck to HFT when they go and add to their account. Likely multiple cuts if they've diversified. It's basically a tax you pay for not having the best access to the fastest server closest to the database.
I think to understand most HFT market makers you have to understand how the markets pay. Most work on a maker taker model. Which means the trader who initiates the trade pays a small fee and the trader who is the passive side, the one who had their order in the market already, gets paid a small fee. as a side note there are inverted markets but lets leave those aside for now. This means to get paid you want to be at…
Hillary will come down on the part of the market that hasn't contributed to her campaigns. Structurally, this means she will make it good for GS who will help write the legislation but bad for anyone else that doesn't belong to the financial hegemony. Politicians say they're protecting the innocent, but really they're just tipping the scales for whoever is backing them. This is how they do.
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Hillary will come down on the part of the market that hasn't contributed to her campaigns. Structurally, this means she will make it good for GS who will help write the legislation but bad for anyone else that doesn't belong to the financial hegemony. Politicians say they're protecting the innocent, but really they're just tipping the scales for whoever is backing them. This is how they do.
What you are describing is not reality.
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The answer is, in fact, "because everybody else does it". https://www.chrisstucchio.com/blog/2012/hft_apology2.html This can be partially fixed with a very technocratic market microstructure change (eliminating the subpenny rule). But politically that's very much a "huh?" point - imagine Bernie Sanders saying "I believe we should let traders quote in increments of 1/100 of a cent, not 1 cent". https://www.chrisstucch…
Eliminating the sub-penny rule would probably be counter-productive for most US equities. You would not see further spread compression (most stocks' natural spreads are already greater than one cent), and displayed size would likely shrink (this latter bit is exactly what happened when prices decimalized). A better alternative would be a tick-size schedule that's a function of price, as is generally done in Japan and…
Decimalization would help even with equities where the natural size > 1c. HFTs who want to get to the top of the book could compete by offering $10.0073 instead of racing to be the fastest at $10.0100. HFTs would compete on price rather than speed.
I think to understand most HFT market makers you have to understand how the markets pay. Most work on a maker taker model. Which means the trader who initiates the trade pays a small fee and the trader who is the passive side, the one who had their order in the market already, gets paid a small fee. as a side note there are inverted markets but lets leave those aside for now. This means to get paid you want to be at…