Equality at the speed of light limited timescale is of relatively small economic value to the world. They are basically equalizing prices faster than you could ever learn about them.
The service of arbitrage is useful, but there is a bit of a winner take all here and a race to the bottom (meaning highest cost way of accomplishing the service). No one may care if it's equalized in 1ms vs 200ms, but the party that can do it in 1ms is going to take all the gain from the spread.
(I don't really blame the arbitrageurs; the markets should be doing batched sealed bid or other mechanisms to equalize participants; and avoid diverting massive amounts of funds to floating balloons between trading centres)
there is a bit of a winner take all here and a race to the bottom (meaning highest cost way of accomplishing the service)
It's true that the fastest arbitrageur takes most of the profit, but when we say the cost is going up (i.e. the "arms race"), that means a bigger chunk of the arb profits (which are basically fixed, regardless of cost) are going to network providers, NIC vendors, FPGA vendors, and so forth. The costs to investors are coming down as the chances of buying a mispriced instrument become smaller and smaller.
The service of arbitrage is useful, but there is a bit of a winner take all here and a race to the bottom (meaning highest cost way of accomplishing the service). No one may care if it's equalized in 1ms vs 200ms, but the party that can do it in 1ms is going to take all the gain from the spread.
(I don't really blame the arbitrageurs; the markets should be doing batched sealed bid or other mechanisms to equalize participants; and avoid diverting massive amounts of funds to floating balloons between trading centres)