Oh come on, if order books were generally accessible I could just see where stuff is traded right now and sell there by myself. It's just that market data for stocks is so heavily gated that HFT guys already have an edge by just buying data from all the excahnges for huge piles of cash.
If this was such a great service why is IEX becoming so big?
HFT is a nightmare from a CSR view. Those companies provide no real value to society (not by any standard) and even worse: By hiring all those talented young people with degrees in various fields they actually hurt society. Give those people real problems to work on, instead of wasting them on optimizing those HFT systems.
> If this was such a great service why is IEX becoming so big?
This is not an informed thesis. This is just an appeal reducible to the following statement: “A thing cannot be a good service if it has a large and organized opposition.”
>HFT is a nightmare from a CSR view. Those companies provide no real value to society (not by any standard) and even worse: By hiring all those talented young people with degrees in various fields they actually hurt society.
If your thesis is that HFT provides no benefits for society, please provide a substantive rebuttal against the claim that it improves liquidity and price discovery.
HFT increases the availability of bids and asks in the orderbook by rapidly volunteering to be the trading counterparty in otherwise inefficient markets. By seeking the best price for its own strategies and making as many trades as possible with as little latency as possible, the increased liquidity is accompanied by improved price discovery.
> Give those people real problems to work on, instead of wasting them on optimizing those HFT systems.
Please define “real problem”, and please explain how the aforementioned benefits contributed by HFT are incompatible with this definition. Meanwhile keep in mind that the vast majority of companies, including those in tech, likely do not work on “real problems”, so next I’m going to ask why this is a meaningful criticism in the first place.
IEX allows and has major liquidity providing HFT firms & probably couldn’t operate without them.
Also IEX is a very small exchange, not one getting huge. Their PR firm is impressive not their size.
Finally there are lots of trading options that allow you multi-exchange order book access. Getting market access is fairly cheap. The expensive part is the counter party risk mitigation. You need someone to prove you are good for the trades you say you are. That has nothing to do with HFT or electronic trading at all.
> Oh come on, if order books were generally accessible I could just see where stuff is traded right now and sell there by myself.
You'd have to write a feed handler for every exchange, and a real-time composite orderbook so you could see where the best order was at every point in time. For every stock. You'd need to rent the fastest network as well.
This is no different from "I could tile my own roof, what do roofers do that is so useful to society?"
> Those companies provide no real value to society
A lot of businesses provide no real value to society. The only way to do that is to interact with a large portion of society. So restaurants for instance only serve the local market, no real value. I mean who benefits, other than the people who eat there? I could go on with a whole load of other businesses.
> You'd have to write a feed handler for every exchange, and a real-time composite orderbook so you could see where the best order was at every point in time. For every stock. You'd need to rent the fastest network as well.
Why would I need to rent a fast network for every stock? I didn't say abolish the exchange, I said make the data open, generally available so I can see for myself whats going on. Also smart order routers are there already, so no I don't have to write them again, every other broker already offers them. Now just cut out the HFT frontrunners and I can actually the price I see on the terminal.
> A lot of businesses provide no real value to society. The only way to do that is to interact with a large portion of society. So restaurants for instance only serve the local market, no real value. I mean who benefits, other than the people who eat there? I could go on with a whole load of other businesses.
That may be right, but that doesn't make HFT any better.
> Now just cut out the HFT frontrunners and I can actually the price I see on the terminal.
High frequency trading is not front-running. High frequency traders 1) do not have a fiduciary duty to other traders in the market, which is a hard (and definitional) requirement for front-running; and 2) cannot see a retail investor’s order before it is executed on an exchange. They can only alter their prices in reaction to orders that have already executed.
> I didn't say abolish the exchange, I said make the data open, generally available so I can see for myself whats going on. Also smart order routers are there already, so no I don't have to write them again, every other broker already offers them.
1. This data is already available for purchase. There’s nothing intrinsically preventing you from acquiring it as an individual. I’ve personally purchased this data as an individual.
2. Even if you can “see for yourself what’s happening”, without the extremely fast market making provided by HFT you’ll be waiting significantly longer just to find a trading counterparty. Your proposal sacrifices the liquidity and price efficiency provided by HFT in exchange for freely available market data, which the vast majority of retail investors will not be able to use (let alone want to).
3. Smart order routing is possible because there is sufficient inter-exchange liquidity. In fact, it is directly facilited by HFT.
I’m not often this blunt on Hacker News, but in this case I think it’s warranted: you do not appear to have even basic familiarity with what you’re criticizing.
If this was such a great service why is IEX becoming so big?
HFT is a nightmare from a CSR view. Those companies provide no real value to society (not by any standard) and even worse: By hiring all those talented young people with degrees in various fields they actually hurt society. Give those people real problems to work on, instead of wasting them on optimizing those HFT systems.