This is an honest question, and forgive me if it's a bit naive, but if they release trading software to the masses under the assumption that the vast majority of users will make few changes, can they rely on the herd to buy enough stock in their software's predictions at a slower rate to get an uptick?
Goldman Sachs will open-source some of its trading software
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Re: Goldman Sachs will open-source some of its trading software
#42Earlier quoted context omitted.
> most of your definitions are still dependent on competitively pricing securities No, the MM doesn't care if TSLA is overpriced. He just sees where everyone is and makes a market roughly there. > You can't provide quotes if you don't have something to quote around. But you don't have to quote around the actual value of the item. That's the point.
I work in a MM group so take this as you will, but the days of profitably making markets by just fitting everything to the screens are long gone.
I think it depends a whole lot on what exactly you are market making and how you're trying to profit. Of course many desks take views as well, but mixing in prop positions doesn't change the essence of it: the MM is trying to make money off being available for other participants.
You can of course also learn some things about where to market is going in the course of this business, and many desks are able to piggy back on some flow information for their advantage.
Re: Goldman Sachs will open-source some of its trading software
#43Of course, if this technology was able to price securities better than the market (the fundamental job of almost every market participant), it would be printing money and they would not release it. This is not the secret sauce, but probably an implementation of a set of standard well known pricing and risk models. That's still useful, and can be expensive to develop, so thanks Goldman.
> the fundamental job of almost every market participant Not true. You might make an argument that this is the effect of having them together in a market, but that's not their job: - Market maker: hang around the market offering to trade with anyone (pref retail) at a spread. Doesn't care whether TSLA is gonna be able to make all those Model 3s. - Pension fund: make sure they can pay the liabilities that are coming d…
Thanks for being so concise. Getting license to sell estates (life insurance), hope to make $$$, worm my way into FINRA to take series 7, then try operate under reg crowdfunding to raise $1 million capital for new biz. What you do now?
Re: Goldman Sachs will open-source some of its trading software
#44This is an honest question, and forgive me if it's a bit naive, but if they release trading software to the masses under the assumption that the vast majority of users will make few changes, can they rely on the herd to buy enough stock in their software's predictions at a slower rate to get an uptick?
Take it with a grain of salt since I did not see the actual source and the article is paywalled. They are probably just releasing the tooling, not actual strategies.
Re: Goldman Sachs will open-source some of its trading software
#45Am I the only one who thinks they want to push the market into applying strategies that they can then trade against? This is classic Wall Street, persuading the masses to take the wrong side of bets.
Re: Goldman Sachs will open-source some of its trading software
#46Anyone who thinks GS is taking any action without the intent of profiting from said action is hopelessly naive.
Re: Goldman Sachs will open-source some of its trading software
#47https://www.businessinsider.com/goldman-sachs-is-making-its-...
"Aug. 12, 2015, 12:33 Goldman Sachs is going the way of Google and Facebook. The investment bank is giving away some of its trading technology to clients through open-source software, according to The Wall Street Journal...."
Am I missing something?
Re: Goldman Sachs will open-source some of its trading software
#48Earlier quoted context omitted.
Investment banks have proprietary trading desks that are effectively hedge funds.
I don’t think this is accurate. Regulators release the Volcker Rule to shut down prop trading at banks.
The Volcker rule contains exemptions for certain prop trading activities. For example, trading in US government bonds is exempt.
Re: Goldman Sachs will open-source some of its trading software
#49Earlier quoted context omitted.
Investment banks don't even have the secret sauce, hedge funds like Renaissance Technologies and D. E. Shaw & Co. are the ones that have it
It's a bit disingenuous to say that BB's don't have a stake in HFT. At the time of Aleynikov's case, Goldman was routinely at the top of the NYSE rankings with regard to programmatic trading volume.
> Goldman was routinely at the top of the NYSE rankings with regard to programmatic trading volume.
I took 'secret sauce' in GP's comment to mean 'profitable strategies'. Don't confuse volume with profitability. It's conceivable that a BB would deliberately lose money in some activities to have clients give them other, more profitable flow/business.
Re: Goldman Sachs will open-source some of its trading software
#50Probably a poison pill that Goldman has engineered countertrading schemes against.
Not unlike the magic numbers the NSA suggested for various encryption schemes.