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by julosflb 1065 days ago
Has HFT any value for the society in general?
5 comments

Yes. It creates liquidity in markets which causes markets to be far more stable and accurately priced. I would put it at worst as morally neutral.
I'd say it depends. A lot of HFT is able to manipulate prices
They add liquidity to the market, so when you (or someone indirectly on your behalf) buy or sell stocks, you (they) get a better price through narrower bid-ask spreads. They also sometimes generate comedy[0].

[0]: https://www.henricodolfing.com/2019/06/project-failure-case-...

Vanguard's Chief Investment Officer said that HFTs are beneficial for them[0].

[0] https://www.sec.gov/comments/s7-02-10/s70210-122.pdf

It technically helps increase market liquidity (enabling someone to easily sell or buy new positions) and there's research that it decreases the bid-ask spread, but I don't buy it. If you believe having a small portion of society be able to easily trade stocks, then yes, but imo, I'd say it generally doesn't have any value for society in general
Seconding that. Nothing in this discussion convinces me that HFT is not simply a money-skimming operation.
Does a stock market have any value to society in general?

If so, should there just be one stock market in the whole world, listing a small set of uncorrelated instruments, or is some level of competition/ variety healthy?

We haven't found any way to have those things without either HFT or something more expensive.

It's consistent and reasonable to take some kind of fringe anti-capitalist position and answer no on one of the first two questions, but if you answer yes, you end up with HFT providing value.