[phil21]

Yep. At risk of adding a "this" comment I've spent years reading on the subject, talking to some of our customers who are HFT, and generally just thinking and learning about it.

I still can't figured out a single value-add they bring to the table, much less to justify their insane compensation or the incredible technology budgets they carry. It's simply sad to me to see some of these brilliant minds (at least on the tech side where I interact) essentially engaged in ripping off fellow citizens at worst and rent-seeking at best.

Of course if you engage them, they will get all hand-wavy about "liquidity" - but I think it's striking that not a single person I've talked to has been able to distill the benefit they bring to society in a simple sentence or paragraph. It always ends with the "most people can't understand" which as I get older I've learned is a euphemism for either "I don't know" or "I don't want to tell you the truth".

Either way, so many billions of dollars taken from the economy and put into useless activity. Absolutely no one will be able to convince me we need millisecond-level liquidity for markets to function efficiently.

[tomp]

HFT don't provide liquidity for liquidity's sake. They make markets more efficient, i.e. closer to the "one true price" (not necessarily the fair price, because there's no way HFTs can outbid all the money collected in index/sovereign founds or printed by central banks). They also reduce the spreads. For an ordinary person, they improve the markets.

The complaint about "brilliant minds being wasted" rings true, but you could make the same complaint about all of finance, and even most of Silicon Valley focused on extracting rents by serving ads - both are ultimately zero-sum games where insiders profit at the loss of society.

I think the ultimate problem is, there are no real problems that smart people could work on and make a contribution (and earn a good living) - or at least I don't see any.