They should be banned anyway. The more we can do to make their operations impossible the better.
Their mere existence makes a mockery of the idea of the stock market as a considered reflection of value of companies and explicitly makes it into a gambling den for dead-eyed people competing to have the fastest card counting systems under their suits. If a company is valuable now, it'll be valuable in 5 minutes.
So in that scenario, is it beneficial to society that someone who has a 50ms delay live feed can unload their shares at a higher price than someone with a 5s delay live feed? Or the same question for someone who has AI to parse the information and execute trades faster than the human?
There's a benefit to liquidity to everyone, but I don't really see a liquidity benefit faster than a few _minutes_, much less faster than a few _ms_: end individual traders don't even get to trade that fast anyway, they're just artificially disadvantaged against the institutions.
Earnings call is a review of the quarterly earnings document usually released earlier that day. The stonk price fluctuates almost entirely on how accurate the guidance was and what the future guidance is. Even doing excessively good in a quarter can have a negative impact because they didn't give their investors an accurate heads up. I guess maybe some horrible pro-Hitler rant may affect the price, but to zero? I haven't seen that.
It just so happens that those who advocate and benefit directly from it are the ones who already have the power to make markets. The product of a company is based on its labor utilization, which doesn't change materially in the (very) short timespans of HFT. Liquidity aside, five minutes isn't going to make much of a difference when most people generally wait weeks or months to make major asset purchases like a car or a house, or to be approved for a small business loan. Only the ultra-wealthy car about milliseconds, because they can afford to make such vast and diverse trades in so little time.
Labor utilization is only one piece of a very big puzzle. Other pieces that change more quickly include commodity and supply chain costs, competitor activities, technological advances, and many other factors, all of which can change quite quickly in our globalized world.
"Quite quickly" and "so quickly that a basement full of racks of FPGAs, point-to-point radios, transcontinental fibre runs and optical switches are required to extract our value" are maybe not exactly the same thing.
I'd wager that without hfts liquidity would be just fine. Maybe smaller stocks wouldn't become the battleground for hft algos, but aside from that they're mostly penny skimming vultures that create the illusion of liquidity as they hop in and out of stuff at fractions of a second.
I think we are going to have very different views as to what the terms "value" and "everyone" mean
because HFT's provide no value at all to the everyday person on mainstreet just looking get by and maybe put 10% of their wages into the stock market for retirement.
if by everyone you mean "the top 1%" and by value you mean "make lots of money at the expense of mainstreet investors" then sure.
> because HFT's provide no value at all to the everyday person
If you participate in the stock market at all, you indirectly benefit from HFTs lowering the bid/ask spread and therefore getting a better price. Now matter how insignificant, but the benefit is there.
Of course if we're dealing in millions, not thousands, then the benefit is more pronounced, but a couple of cents here or there still make a difference.
At the very worst HFT firms are a net neutral.
> "make lots of money at the expense of mainstreet investors"
Can you elaborate on this further? I don't see how HFTs make money at the expense of mainstreet investors. HFTs make money on the expense of inefficiencies, therefore making the markets more efficient.
Idk I think technological progress/humanity would do a lot better in general without the parasitic effects of people making the markets/trading their "job".
If someone writes some software, or grows some food, or balances some accounts, or paints a wall, they are all being endlessly more productive than someone who buys on a low and sells on a high and pockets the difference all within 100ms.
Investment means support and confidence in a venture or resource. I think a lot of the financial industry's problems arise from the switch from "investment in business x because I like what they're doing and am confident they'll succeed" to the mantra of "investment in business x because I don't actually care about the company but the stock history tells me I can make a quick buck". Market stability is a thing of the past, no wonder we're constantly on the edge of a recession.
Their mere existence makes a mockery of the idea of the stock market as a considered reflection of value of companies and explicitly makes it into a gambling den for dead-eyed people competing to have the fastest card counting systems under their suits. If a company is valuable now, it'll be valuable in 5 minutes.