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

171–180 of 328 posts

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

#171

Post by harryh »

jedberg wrote: post #32

Can someone explain to me what is gained by processing the trades in real time vs. batching the processing into say 1 second increments? What does GS gain by being able to get their trade there a few milliseconds before the competition and what do I as a consumer gain from this?

Batching won't solve any problems you might think it would solve. The real world is continuous. Because of this, everyone is incentivized to wait until the last possible millisecond (or nanosecond) before the auction to submit bids so the incentive to build fast acting systems remains.

There are other problems as well, like how to deal with bid/ask imbalances at auction time.

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

#172

Post by harryh »

tosh wrote: post #113

A great read on high frequency trading: Barbarians at the Gate https://queue.acm.org/detail.cfm?id=2536492

Title is actually Barbarians at the Gateways which is, of course, as play on words on the actual Barbarians at the Gate:

https://en.wikipedia.org/wiki/Barbarians_at_the_Gate:_The_Fa...

Another great tail of finance that operated at much slower speeds.

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

#173

Post by goatinaboat »

em500 wrote: post #51
nickles wrote: post #12

Earlier quoted context omitted.

> pointless expenditure on an ultimately meaningless arms race 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. > if we imposed reasonable limits on the time required to hold an equity in order for a trade to be legally recognized This would damage…

> 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…

Pretty much everything at sub-second resolution is pointless.

Some people think so, but the truth is you will simply shift the competition from “as fast as possible” to “within as few picoseconds after exactly one second” or whatever the limit is.

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

#174

Post by wikibob »

Anyone here working at Goldman?

I’ve heard very mixed things about working there. Would love some first hand stories!

Have things changed from some years ago where the technology didn’t really get any respect and everyone was second class to the front office traders?

How’s the work environment? Is there still a dress code? Is the system kept running by heroics and sleepless nights, or is there a mature understanding of human factors?

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

#175

Post by assblaster »

JDiculous wrote: post #148
ypcx wrote: post #139

Earlier quoted context omitted.

The theory sounds great. But why then, our streets are lined with homeless, and our nations are stricken with poverty? Could it be that the only real aim and motivation of market traders is to earn money? One day, maybe.... when these are replaced with DAOs on the blockchain. But until then it's the Wolf of Wall Street.

Because having homeless people lining our streets on our commutes to/from our jobs is a daily reminder that if we don't work hard enough to increase corporate profits, then our bosses might lay us off and we'll end up like them. That or moral apathy. At some point in the 80s we decided that markets driven by business profits should dictate every aspect of society. I imagine 100 years from now they'll look back at tod…

100 years after Communism burst on the scene, we currently look at that development with disgust.

Right now most people have access to abundant food, cellphone in every pocket, access to a wealth of information, access to transportation, incredible medical advances.

I can't imagine that the progress we've made would be scorned. Like other market driven forces, bad players will not be rewarded as information about them increases.

However, if information is not increased because of something like a company buying a newspaper so investigative threats can be used against politicians to avoid information gathering, then we have problems. This is more crony capitalism than just capitalism.

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

#176

Post by School-Cotton »

wepple wrote: post #163
School-Cotton wrote: post #147

Earlier quoted context omitted.

So what? Poker doesn’t provide any value to society, but if other people want to play it, how is that hurting me?

I think you’ve proven the point here? Poker does not hurt anyone else. Wall St does. See: 2008.

The financial crisis was not caused by high-frequency trading. I don’t see how it’s related.

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

#177

Post by lallysingh »

dalbasal wrote: post #140
1e-9 wrote: post #110

Markets around the world are determining prices on a massive variety of instruments that derive value from the current and future value of products such as currencies, interest rates, equities, grains, livestock, metals, oil, gasoline, natural gas, and electricity. These prices allow us to prioritize resources, make fair transactions, and manage risk (i.e. buy insurance on the value of critical products so that we ca…

The upshot of this argument is that this is valuable activity. We need markets to price tradable assets and provide liquidity. The counterargument is that there are diminishing and/or negative returns to increased liquidity and velocity. Take just stocks. Liquidity is not a problem. You have liquidity whether trades take minutes or milliseconds. Pricing? I'd say we have pricing covered too, at least the pricing that…

> Meanwhile, all this stuff costs money, people, resources that aren't available for actual productive work instead of overhead.

That's a very high standard. What's productive? What's productive enough, in your book, to be worth the effort used here?

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

#178

Post by jasode »

Merrill wrote: post #150
antientropic wrote: post #133

Earlier quoted context omitted.

Is there any empirical evidence that these perceived benefits to society actually ever materialize? It's clear that there is a benefit to a trader from knowing something milliseconds before the rest of the market (otherwise Goldman wouldn't be doing this), but it's not clear at all to me that it helps the rest of us.

Business produces goods and services. Finance is an online multiplayer game. They are two weakly-connected systems.

>Business produces goods and services. Finance is an online multiplayer game.

But finance is also products & services.

Think of a corn farmer. It's easier to think of him adding tangible value to society because "corn == food".

In contrast, finance just seems like useless office workers copy pasting numbers around in Excel spreadsheets. (This is probably true in many cases.)

But the farmer often wants to sell "futures" which is a product & service provided by the financial industry. Instead of using the jargon of "futures", we can just say the farmer wants a product/service to give him a "guaranteed-selling-price-regardless-of-future-volatility-of-corn-prices-so-I-can-sleep-at-night".

Other examples of desirable finance products that farmers want include crop insurance and equipment loans/leases.

>They are two weakly-connected systems.

Farmers' food crops and the financial products/services of of futures is an example of how businesses making tangible products and the finance industry are strongly connected.

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

#179

Post by varshithr »

grenoire wrote: post #144
antientropic wrote: post #133

Earlier quoted context omitted.

Is there any empirical evidence that these perceived benefits to society actually ever materialize? It's clear that there is a benefit to a trader from knowing something milliseconds before the rest of the market (otherwise Goldman wouldn't be doing this), but it's not clear at all to me that it helps the rest of us.

We know, empirically, that a lack of liquidity increases trading costs, which in turn is directly channeled to the prices of goods and services that rely on this liquidity (more or less everything in the world, even more indirectly ones like education). It's difficult to say 'things would be X% more expensive' because of the interconnected complexity the GP was talking about, but there is definitely a very apparent b…

Forgive me for asking but what does GP here stand for?

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

#180

Post by raxxorrax »

1e-9 wrote: post #131
epiphanitus wrote: post #126

Earlier quoted context omitted.

>> The markets are kind of like a massive, distributed, realtime, ensemble, recursive predictor that performs much better than any one of its individual component algorithms could. That's really interesting, I never thought of it that way. >> markets work by polling the expertise of many different parties who all understand a piece of how things should be valued. Does the whole picture ever become apparent to all of…

Nobody has the whole picture. I would say that the more extreme an individual event is, the easier it tends to be to understand in retrospect. This depends greatly upon one's analytical sophistication, level of market data, fundamental product understanding, and professional network (to know what happened in other firms).

If nobody has the whole picture, how can we be sure if it's beneficial?

edit: Or asked differently: What do we have now with high frequency trade established compared to the situation before?

Post reply on HN