Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Goldman Sachs is spending $100M to shave milliseconds off stock trades

cnbc.com

Post reply on HN
Print view View original

81–90 of 328 posts

Re: Goldman Sachs is spending $100M to shave milliseconds off stock trades

#81

Post by ramblerman »

alkibiades wrote: post #76
ramblerman wrote: post #73

Earlier quoted context omitted.

As an outsider with admittedly limited knowledge. What would happen if you limited movement on a stock to be on the second? Would that not prevent this never ending race for faster and closer access. Something that doesn’t really seem to be adding value to society or the market.

who gets the priority in order fulfillment placed in that second? otherwise you have the same issue. the brokerage might also be tempted to make money by front running those trades since that have all the trades in front of them for a second before needing to be fulfilled

Let’s say Priority is made random. In other words It doesn’t pay to play at the second level.

As for bad actors you are 100% right but assume they can be trusted or regulated to behave for now.

I’m just interested if removing HFT at less than minute scope as it would have been before PCs would actually impact the world negatively.

Re: Goldman Sachs is spending $100M to shave milliseconds off stock trades

#82

Post by alkibiades »

jedberg wrote: post #47
maximente wrote: post #43

Earlier quoted context omitted.

suppose "real time" means order of magnitude milliseconds for example's sake. the price could change a bunch in that interval of 1000ms. you may think "well only slightly" - fractions of cents - but if GS can make fractions of pennies on those events, scaled up to all seconds that the market is open, you can see why that's potentially attractive. for whatever it's worth, GS in 2009 claimed that HFT generated <1% of t…

Ok that explains why they want to do it, but how does it benefit the market to allow that? How does it benefit the consumers and corporations? In other words, what is the argument against creating a law that requires a minimum of 1 second batches for example?

my question would be how/who does it harm? what is the argument FOR setting that law? other than you think it’s greedy or something?

Re: Goldman Sachs is spending $100M to shave milliseconds off stock trades

#83

Post by alkibiades »

ramblerman wrote: post #81
alkibiades wrote: post #76

Earlier quoted context omitted.

who gets the priority in order fulfillment placed in that second? otherwise you have the same issue. the brokerage might also be tempted to make money by front running those trades since that have all the trades in front of them for a second before needing to be fulfilled

Let’s say Priority is made random. In other words It doesn’t pay to play at the second level. As for bad actors you are 100% right but assume they can be trusted or regulated to behave for now. I’m just interested if removing HFT at less than minute scope as it would have been before PCs would actually impact the world negatively.

would it impact it positively? why?

Re: Goldman Sachs is spending $100M to shave milliseconds off stock trades

#84

Post by TomMarius »

eecc wrote: post #75
nickles wrote: post #37

Earlier quoted context omitted.

Adding to this, HFT is a product of rule 612 of Reg NMS (the sub-penny rule). Markets are not allowed to show quotes in increments of less than $0.01 for most names. Since traders cannot compete on price, they have been forced to compete exclusively on speed. The impact of such regulation was tested by the SEC recently with the 'tick size' program. Instead of reducing the minimum increment, some names saw it increase…

What’s the minimum lag for a packet to reach around the world? Multiply x2 and add an extra 10%. Make that the minimum order placement tick duration. There would be 1 single global price and no arbitrage between markets possible.

Now we just need the teleport

Re: Goldman Sachs is spending $100M to shave milliseconds off stock trades

#85

Post by TomMarius »

habnds wrote: post #78
codingslave wrote: post #17

People love to rail on HFT, but at this point, its really not that profitable. It's just a reality of trading in the markets. There was a blip of time between 2008 and 2014 when HFT was extremely profitable. Those inefficiencies have been gone from the market for years. People were whooped into anger about how much money was being made, at this point its a complete non issue and needs to be removed from the highlight…

people aren't mad only because tons of money is made on hft. It's also because money is _wasterd_ on hft. That's $100 million dollars spent on something that has 0 use to society. It's just rich people playing weird games. Think about the social benefits of $100 million invested in nyc transit infrastructure. The economy's incentive structure is broken and this is a prime example.

HFT has more benefit than huge villas and cars and private jets. It can bring benefit to software and hardware. I'm okay.

Re: Goldman Sachs is spending $100M to shave milliseconds off stock trades

#86

Post by harry8 »

twic wrote: post #61
nickles wrote: post #37

Earlier quoted context omitted.

Adding to this, HFT is a product of rule 612 of Reg NMS (the sub-penny rule). Markets are not allowed to show quotes in increments of less than $0.01 for most names. Since traders cannot compete on price, they have been forced to compete exclusively on speed. The impact of such regulation was tested by the SEC recently with the 'tick size' program. Instead of reducing the minimum increment, some names saw it increase…

On the other hand, the Intercontinental Exchange reduced the tick size for sterling interest rate futures towards the end of 2018, and the result was ... decreased liquidity! And resulting increased volatility. I'm not sure anyone knows for sure why this happened, but the best theory i've heard is that the reduction in tick size reduced the expected profits of market makers, because they are collecting less spread on…

you have some firms that know how to quote a product and can make enough money doing it to be worthwhile. They've done a lot of research and implemented systems to do that.

Change the rules on them for arbitrary reasons, the firms that were there leave. At least long enough to build new systems and trading strategies. Who replaces them, anyone? Why?

Increase the tick size, liquidity drops. Decrease the tick size, liquidity drops. The moral there is know why you are changing the rules in the market, how you are doing it and the implementation details and side effects that will result in getting the result you want or just don't do it. This could be better is garbage, know it is. Change is not good for its own sake if you want people to quote.

Re: Goldman Sachs is spending $100M to shave milliseconds off stock trades

#87

Post by phildawes »

eecc wrote: post #75
nickles wrote: post #37

Earlier quoted context omitted.

Adding to this, HFT is a product of rule 612 of Reg NMS (the sub-penny rule). Markets are not allowed to show quotes in increments of less than $0.01 for most names. Since traders cannot compete on price, they have been forced to compete exclusively on speed. The impact of such regulation was tested by the SEC recently with the 'tick size' program. Instead of reducing the minimum increment, some names saw it increase…

What’s the minimum lag for a packet to reach around the world? Multiply x2 and add an extra 10%. Make that the minimum order placement tick duration. There would be 1 single global price and no arbitrage between markets possible.

What about order cancels - would you similarly limit those?

Re: Goldman Sachs is spending $100M to shave milliseconds off stock trades

#88

Post by hoseja »

eecc wrote: post #75
nickles wrote: post #37

Earlier quoted context omitted.

Adding to this, HFT is a product of rule 612 of Reg NMS (the sub-penny rule). Markets are not allowed to show quotes in increments of less than $0.01 for most names. Since traders cannot compete on price, they have been forced to compete exclusively on speed. The impact of such regulation was tested by the SEC recently with the 'tick size' program. Instead of reducing the minimum increment, some names saw it increase…

What’s the minimum lag for a packet to reach around the world? Multiply x2 and add an extra 10%. Make that the minimum order placement tick duration. There would be 1 single global price and no arbitrage between markets possible.

How is the packet traveling? Through undersea fiber? Through Starlink? Through the Earth by neutrinos?

Re: Goldman Sachs is spending $100M to shave milliseconds off stock trades

#89

Post by saberdancer »

habnds wrote: post #78
codingslave wrote: post #17

People love to rail on HFT, but at this point, its really not that profitable. It's just a reality of trading in the markets. There was a blip of time between 2008 and 2014 when HFT was extremely profitable. Those inefficiencies have been gone from the market for years. People were whooped into anger about how much money was being made, at this point its a complete non issue and needs to be removed from the highlight…

people aren't mad only because tons of money is made on hft. It's also because money is _wasterd_ on hft. That's $100 million dollars spent on something that has 0 use to society. It's just rich people playing weird games. Think about the social benefits of $100 million invested in nyc transit infrastructure. The economy's incentive structure is broken and this is a prime example.

Those 100m are not destroyed by burning them in an HFT furnace but rather used to pay developers, hardware, factory workers etc. Sure, it's not going directly into infrastructure but it is not lost.

In fact, it's quite possible that if it wasn't invested into HFT it would be held as cash by the company or paid out as a dividend (which is fine as well).

Re: Goldman Sachs is spending $100M to shave milliseconds off stock trades

#90

Post by arugulum »

jiggawatts wrote: post #52
em500 wrote: post #51

Earlier quoted context omitted.

> What about price discovery is pointless? Would you prefer that prices update only once a day? Once a week? Once a month? Realtime pricing of securities and derivatives is critical for an efficiently functioning economy. Pretty much everything at sub-second resolution is pointless. I'd like to hear a coherent argument how realtime or even sub-second pricing of securities and derivatives is critical for an efficientl…

This. A million times this. All possible arguments for price discovery are totally invalidated by regular market closures. Conversely, if sub-second resolution is somehow "a good", then by extension sub-millisecond price discovery is "even better". There are some insane people that state this kind of gibberish with a straight face. If millisecond are good, then surely microseconds are even better! Next... nanosecond…

>Conversely, if sub-second resolution is somehow "a good", then by extension sub-millisecond price discovery is "even better". There are some insane people that state this kind of gibberish with a straight face.

if sub-second Internet latency is somehow "a good", then by extension sub-millisecond Internet latency is "even better". There are some insane people that state this kind of gibberish with a straight face.

If millisecond are good, then surely microseconds are even better! Next... nanosecond resolution Internet latency for the uuuuuultimate speed of information.

Surely this is crazy talk!

Post reply on HN