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Jane Street suffers $15B hit after meltdown at Situational Awareness

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Re: Jane Street suffers $15B hit after meltdown at Situational Awareness

#91

Post by lokar »

phil21 wrote: post #90
lokar wrote: post #85

Earlier quoted context omitted.

Does it really hurt institutional traders? How? Is it based on the idea that they can’t get the retail spreads? Because there is no world where they would have ever gotten them. A market maker would loose money doing that.

I'm certainly no expert whatsoever. This is just my understanding from talking with a few folks I consider quite smart who work in the space. Some working for HFT firms, some elsewhere. Also reading on the topic over the years. There does seem to at least be some evidence that HFT firms decrease retail spreads overall. Either way, my main point being made is that negative impact to retail traders is very much in ques…

That seems to be about a fee change that increased costs for market makers, widening spreads.

Re: Jane Street suffers $15B hit after meltdown at Situational Awareness

#92

Post by master_crab »

phil21 wrote: post #80
DoesntMatter22 wrote: post #79

Earlier quoted context omitted.

It's talking about revenue not profit

Net revenue generally means profit. Although I believe this also includes unrealized gains. Basically profit from trading before they pay for salaries and office rent and all that jazz.

No net revenue is still the top line number (just minus some things like allowances or some other artifact or exception). Profit is the bottom line.

Re: Jane Street suffers $15B hit after meltdown at Situational Awareness

#93

Post by margalabargala »

otterley wrote: post #89
margalabargala wrote: post #75

Earlier quoted context omitted.

Right, and plenty of comments containing non-zero snark are fine. There's a line over which comments become unreasonable. If mine was over that line, so are a good 30% of HN comments. Seeing as those comments exist, I think your comment flagging criteria are what need to be adjusted here. Frankly I think you're just annoyed because the reaction to your comment was not "oh wow this guy could work for Jane Street if he…

The language is clear and unambiguous, and is intended to set a floor for the caliber and quality of discussion here. If 30% of comments here are equally bad, that means it’s not enforced as well as it could be. It doesn’t mean we’re intentionally lowering the standards. My intent when I made that statement was not how you interpreted it. Its people genuinely impress me. And besides, what if I could work for them? Wo…

Well, you certainly didn't use the "most charitable interpretation" of my comment, now did you? Why not assume that I too am as competent as you see yourself and simply also don't want to move to Chicago where Jane Street definitely is? It's a weak person who hides behind rules they don't themselves follow.

Lots of companies manage to impress lots of incompetent, arrogant people. Your initial comment sounded like such a person and mothing you've said since has done anything to disabuse the reader of that. "The rules say you're not supposed to reply with sarcasm! Flagging your comment!" says the person that Jane Street would totally love to hire.

Like I said, you're just annoyed someone is criticizing your arrogance. If you weren't being arrogant, then my initial reply is utterly unobjectionable; it's only unkind or sarcastic in response to the arrogant interpretation of your initial comment, and is inert to the "best possible" interpretation by the rules you don't follow but want others to.

Re: Jane Street suffers $15B hit after meltdown at Situational Awareness

#94

Post by ralph84 »

Retric wrote: post #87
loeg wrote: post #60

Earlier quoted context omitted.

> Are they "trading" or "high-frequency-ripping-off-retail-investors"? HFT doesn't cost retail investors anything.

Market makers are simply an artifact due to how shares are traded based on limitations that existed before computers. The aren’t some inherent aspect of having a stock market. The money isn’t coming from thin air. If N people trade a a finite set of shares back and forth every day the only way to extract money from that set of people is for them to lose money.

Yeah, the stock market may be positive sum over the long-term, but it's certainly zero sum over the millisecond-term. Whether it's "retail" or "institutional" that is paying for HFT profits, it's all retail in the end.

Re: Jane Street suffers $15B hit after meltdown at Situational Awareness

#95

Post by apimade »

loeg wrote: post #60
bflesch wrote: post #56

Earlier quoted context omitted.

Are they "trading" or "high-frequency-ripping-off-retail-investors"? It's easy to make paper billions with synthetic shares and infinite deadline extensions for settlement. I'm old and still remember when Ken Griffin was lauded a clever person before he got caught with his hands in the GME mayo jar..

> Are they "trading" or "high-frequency-ripping-off-retail-investors"? HFT doesn't cost retail investors anything.

Liquidity providers like Jane Street, Citadel, et al make money on the spread. They also buy order flows from integrators, and retail investor order flows are now a product.

i.e. retail investor → brokerage platform → clearing/execution infrastructure → Jane Street → payment back toward the brokerage side of the chain.

Who captures the economic value created by retail order flow?

Jane Street.

In an ideal market, this product line shouldn't exist. Institutional investors should not be making money on the activity of retail investors.

What incentives determine where that flow is sent, and would investors receive better execution if their orders were exposed to genuinely competitive price formation rather than privately internalised by a concentrated group of wholesalers?

The regulators should be squashing any HFT related or retail order flow, but it's so opaque _by design_ that getting policymakers, or the general public, to understand that retail investors are paying some portion of tax on their $20T USD annual trades to these companies.

Granted, these order flows _sometimes_ work the other way -- and retail users get a better deal on a trade.. But would you really expect the market to be worth what it is, if that was the case less more often than not?

There is a clear and obvious conflict: the broker is supposed to seek the best execution for the customer while potentially being paid by the firm receiving that customer’s order. How can that be, when the broker's in bed with the liquidity providers?

Re: Jane Street suffers $15B hit after meltdown at Situational Awareness

#96

Post by apimade »

loeg wrote: post #83
SanDiegoSun wrote: post #69

Earlier quoted context omitted.

HFT raises pricing for retail traders by allowing front running of trades and makes the market less competitive overall for those without the infrastructure to do so. This isn’t even in question.

No, it doesn't. HFT lowers spreads for retail at the cost of slower market makers -- hedge funds. HFT isn't front-running (which is illegal).

[dead]

Re: Jane Street suffers $15B hit after meltdown at Situational Awareness

#97

Post by otterley »

margalabargala wrote: post #93
otterley wrote: post #89

Earlier quoted context omitted.

The language is clear and unambiguous, and is intended to set a floor for the caliber and quality of discussion here. If 30% of comments here are equally bad, that means it’s not enforced as well as it could be. It doesn’t mean we’re intentionally lowering the standards. My intent when I made that statement was not how you interpreted it. Its people genuinely impress me. And besides, what if I could work for them? Wo…

Well, you certainly didn't use the "most charitable interpretation" of my comment, now did you? Why not assume that I too am as competent as you see yourself and simply also don't want to move to Chicago where Jane Street definitely is? It's a weak person who hides behind rules they don't themselves follow. Lots of companies manage to impress lots of incompetent, arrogant people. Your initial comment sounded like suc…

facepalm

Way to double down on being a dick, dude.

Re: Jane Street suffers $15B hit after meltdown at Situational Awareness

#98

Post by Anon1096 »

ralph84 wrote: post #94
Retric wrote: post #87

Earlier quoted context omitted.

Market makers are simply an artifact due to how shares are traded based on limitations that existed before computers. The aren’t some inherent aspect of having a stock market. The money isn’t coming from thin air. If N people trade a a finite set of shares back and forth every day the only way to extract money from that set of people is for them to lose money.

Yeah, the stock market may be positive sum over the long-term, but it's certainly zero sum over the millisecond-term. Whether it's "retail" or "institutional" that is paying for HFT profits, it's all retail in the end.

The millisecond-term zero sum game is part of what allows for a positive sum long term. For example, zero fee trading was pioneered by Robinhood and only possible because of payment for order flow, and as a result it's virtually unheard of now for retail to be paying per transaction. Now more retail investors can participate and everyone benefits. You can also point to lower spreads and faster execution as direct benefits.

Re: Jane Street suffers $15B hit after meltdown at Situational Awareness

#99

Post by 0xbadcafebee »

otterley wrote: post #88
0xbadcafebee wrote: post #67

Earlier quoted context omitted.

There is a significant difference between sarcasm meant to insult, and sarcasm meant to be playful humor with a point. Common uses of sarcasm include witty or playful language, humorous banter, the expression of frustration at unfortunate events, self-deprecation, and as a coping mechanism for difficult situations. I see that you couldn't tell the difference in that situation, but trust me, that person was not insult…

The language is clear and unambiguous, and is intended to set a floor for the caliber and quality of discussion here. I take your point, but the humor, if it was that, was made clumsily and was not well received. It’s not just me who felt that way; it was downvoted and eventually killed.

Is it though? Almost all the guidelines are curt and open to interpretation. For example, what counts as snarky? What counts as kind? Is there some hidden arbiter in between the characters I can't see? Not everyone will know exactly what these mean in every situation.

In truth, the rules here are intentionally vague, so they can be used as a cudgel by people who don't like what they read. For the mods it's for behavioral control, and for the users it's for thought control. The mods want the website to be a financial tool for YC, and the users want all opinions to mirror their own. But HN is built awkwardly, and forces too many different kinds of users into one tiny space. So the mods do what they can to remove submissions and kill comments, to make the appearance of some kind of nerd chat gestalt. This thread is an example of that failed attempt at enforced harmony. You can't punish people into electing to behave the way you want, it just makes them angry.

Re: Jane Street suffers $15B hit after meltdown at Situational Awareness

#100

Post by ralph84 »

Anon1096 wrote: post #98
ralph84 wrote: post #94

Earlier quoted context omitted.

Yeah, the stock market may be positive sum over the long-term, but it's certainly zero sum over the millisecond-term. Whether it's "retail" or "institutional" that is paying for HFT profits, it's all retail in the end.

The millisecond-term zero sum game is part of what allows for a positive sum long term. For example, zero fee trading was pioneered by Robinhood and only possible because of payment for order flow, and as a result it's virtually unheard of now for retail to be paying per transaction. Now more retail investors can participate and everyone benefits. You can also point to lower spreads and faster execution as direct ben…

Or you could just hold auctions a few times per day and eliminate the billions of dollars spent trying to win a pointless race.
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