What tax do these type of companies pay?
I'm gonna guess they aren't paying the "retail" short term capital gain tax.
Understanding Jane Street
21–30 of 392 posts
Re: Understanding Jane Street
#22Quoted post unavailable.
They theoretically facilitate capital allocation by increasing liquidity and hence aid in price discovery, if they operate strictly within the market maker role. Whether it plays out like this in practice has been debated elsewhere.
Re: Understanding Jane Street
#23Generally good article that delves into how a market maker functions. Couple points: Re EA: quoting my boss, EA isn't really a dominant thing in the market maker space, it's pretty much only espoused by a couple high profile individuals (mainly, SBF). Re strategy: point about how there's little strategy involved in being a market maker is off-base. Everything is ultimately strategy: do I continue to pour resources in…
Does a market maker consider another market maker “toxic” by your definition? I assume by “toxic” you mean too smart? Or do you mean they cheat?
"Order flow toxicity is the measure of a trader's exposure to the risk that counterparties possess private information or other informational advantages."
Usually, flow from other MMs isn't toxic.
Toxic flow can also just be someone who's executing a very large order, even if that counterparty isn't informed. If you fill them as they are starting to work their order, you could get run over as they continue to finish that order and push the price against you.
Re: Understanding Jane Street
#24What tax do these type of companies pay? I'm gonna guess they aren't paying the "retail" short term capital gain tax.
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Re: Understanding Jane Street
#25Earlier quoted context omitted.
Does a market maker consider another market maker “toxic” by your definition? I assume by “toxic” you mean too smart? Or do you mean they cheat?
"Order flow toxicity is the measure of a trader's exposure to the risk that counterparties possess private information or other informational advantages." Usually, flow from other MMs isn't toxic. Toxic flow can also just be someone who's executing a very large order, even if that counterparty isn't informed. If you fill them as they are starting to work their order, you could get run over as they continue to finish…
Flow from other HFT / market makers is often very toxic. They are playing the exact the game as you.
Re: Understanding Jane Street
#26Quoted post unavailable.
They minimize rent extraction from pension funds by bringing scale economies to an industry that used to be manually and inefficiently provisioned.
Evidence: the extinction of manual market makers, and the observed reductions in transaction costs, by virtue of increases in liquidity and reductions in bid-offer spreads.
Re: Understanding Jane Street
#27My greatest regret is not getting into this firm
There are a bunch of these firms. And when you pass the gauntlet, you realize that the people are smart but no smarter than at other firms. At some point, the strict hiring filter just produces noise. If anything, having that many achievers results in bored people doing things that are suboptimal for the performance of the firm as a whole. Whole divisions of wasted talent spawn and self perpetuate. It's the hiring pr…
There's also the boat loads of money.
Re: Understanding Jane Street
#28Quoted post unavailable.
It sounds like you aren't really interested in a rational discussion by the second half of your post, but the typical arguments (incl in the post) for are that market makers reduce inefficiencies in the market & provide liquidity that significantly reduces the bar (i.e. make trading cheaper) for retail investors (like you or me) to trade. I think it is generally accepted that society does benefit from a modern and ef…
I don't do stock market trading, but even those who do that I know of, are doing so via companies such as: Robin Hood, E-Trade, Fidelity, Charles Schwab, Vanguard...
Are these "market makers" working behind the scenes to facilitate the operation of those retail facing companies? Is Black Rock buying all the real estate also good for (potential) retail investors like me? Because it's starting to feel like we're being told to cheer for those faciliting the ever-increasing wealth disparity of society.
Re: Understanding Jane Street
#29Re: Understanding Jane Street
#30Generally good article that delves into how a market maker functions. Couple points: Re EA: quoting my boss, EA isn't really a dominant thing in the market maker space, it's pretty much only espoused by a couple high profile individuals (mainly, SBF). Re strategy: point about how there's little strategy involved in being a market maker is off-base. Everything is ultimately strategy: do I continue to pour resources in…
). By setting up a structure such that you profit during a crash (either by selling puts, leaning net short, or through some other method), you introduce an uncorrelated return stream that can really help isn't selling puts directional? One strategy could be something like trying to find a way to bet on volatility but without a negative carry or at least as small as possible...this is hard to do. Taleb's universa fun…
Sorry I meant to say buying puts (and have edited comment). Buying puts is directional and has negative carry. That's often fine because when your puts aren't making money your market making strategies should be doing well and vice versa