61–70 of 238 posts
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Before you start talking about what would be effective in reducing the amount of high frequency trading you have to make the case that reducing HFT is a good goal in the first place. This is a challenging case to make.
Why is it challenging? What conceivable valuable function does front-running serve?
It's becoming truly kafkaesque how often this claim comes up on Hacker News.
I think this is well known. The real problem is that the traders are much smarter than the regulators, and their ability to obscure far exceeds the regulators' ability to untangle. Incentivise your regulators better and you might end up attracting some real talent who can unearth the tricks the crafty traders pull every day (I am an ex trader, from a bulge bracket IB, and trust me, what some of these guys do is not a…
> I think this is well known. I hadn't heard of this. But then again, I'm not an institutional investor and I don't place a lot of trades.
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There is no good argument for this. The problems you think it might solve...it doesn't solve. Hint: if the minute long auction closes at precisely the minute boundary at what time do you want to put your orders in?
As well as making the current bids invisible, you can reduce the auction times considerably - once per second, for instance.
Earlier quoted context omitted.
Before you start talking about what would be effective in reducing the amount of high frequency trading you have to make the case that reducing HFT is a good goal in the first place. This is a challenging case to make.
Why is it challenging? What conceivable valuable function does front-running serve?
However the term has expanded a lot over the years to mean a lot of different things to a lot of different people. So what does it mean to you?
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Fees on trading would not meaningfully discourage high frequency trading and would just be passed on to buyers and sellers of stock in the form of larger bid/ask spreads.
I think that's about half right. A 0.5% tax on all equities trades, which is what Bernie was proposing, would put a bunch of HFTs out of business basically overnight and at the same time dramatically increase costs for investors via 1) the tax (obviously) 2) wider spreads 3) reduced liquidity.
The HFT shops put millions of dollars into research to attempt to ascertain correct prices (e.g. ETF pricing, derivatives pricing, etc). If they are disincentivized from trading in the equities markets, they will no longer be a conduit of relevant pricing information from other global markets into the equities markets. That means investors (big Wall Street firms catered to by IEX) and retail (you and me in our individual accounts) are more likely to be trading mis-priced markets.
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It's mostly about how skimming a tiny bit of cash off of every trade is perfectly good for the exchanges to do to john Q public, but heaven help us if real traders have to put up with that. I have no idea if Sanders' plan was good or not, I'm more grousing about how critically important principles of how the market is supposed to work seem to vary depending on whether you're talking about consumer-level investments v…
I still don't get what you're trying to say. Who is "skimming a tiny bit of cash off of every trade"? Do you buy into the notion that HFT is somehow so fast that it can travel back in time and jump ahead of orders that have just executed?
Earlier quoted context omitted.
Fees on trading would not meaningfully discourage high frequency trading and would just be passed on to buyers and sellers of stock in the form of larger bid/ask spreads.
I think that's about half right. A 0.5% tax on all equities trades, which is what Bernie was proposing, would put a bunch of HFTs out of business basically overnight and at the same time dramatically increase costs for investors via 1) the tax (obviously) 2) wider spreads 3) reduced liquidity.
The problem with this essay is that it conflates the needs of a large institutional investors like Yale with the needs of small investors (like you and me). In many cases these needs can be inverted. Yale wants to buy and sell large blocks of stock without the price moving away from them. I want to buy and sell stock at the best possible price with all of the latest information transmitted to the market as fast as po…
Uhmm, maybe you, but definitely not me. Most people I know (I agree though, I live outside NYC or any big financial center) don't give a rat's ass about where the market is going, which stocks are good and which are bad. We invest a lot into our 401(k)'s and the rest we put in index funds. So my interests are definitely aligned more with large institutional investors.
BTW my personal investment strategy is not to get some kind of windfall during retirement. The only thing I really look for is that if I saved well, I will have enough to retire on (i.e. not ask for others for monetary help). I just want my funds to not fail.
Someone will call this a submarine article for IEX but I don't think this is far, it was written as an oped by Dave Swensen, the famous head of Yale's endowment fund. Just so the issue is clear, almost all hedge funds don't do active/passive also called maker/taker, but rather they pay a flat fee per share traded to their sell side broker. The sell side broker will then collect/pay the exchange fees. This means that…
The problem with this essay is that it conflates the needs of a large institutional investors like Yale with the needs of small investors (like you and me). In many cases these needs can be inverted. Yale wants to buy and sell large blocks of stock without the price moving away from them. I want to buy and sell stock at the best possible price with all of the latest information transmitted to the market as fast as po…
> small investors (like you and me) Uhmm, maybe you, but definitely not me. Most people I know (I agree though, I live outside NYC or any big financial center) don't give a rat's ass about where the market is going, which stocks are good and which are bad. We invest a lot into our 401(k)'s and the rest we put in index funds. So my interests are definitely aligned more with large institutional investors. BTW my person…