[eru]

Actually, not. These market makers are often prop shops. That means they use their own fund (prop = proprietary) to do the trading. They can do that because they don't need much capital to run.

So the story here is that over the last twenty years they stole the lunch from the traditional market makers like eg banks.

Of course, they got rich in the process. But they started from relatively modest means, compared to the companies they took on.

Michael Lewis's 'Flash Boys' is an hilarious account of this process. Well, it's involuntarily hilarious, because to tell his story, Lewis needs to cast Goldman Sachs (!) and other big banks as the victim. See the rebuttal 'Flash Boys: Not so fast' by Peter Kovac for more insight.

[leg100]

None of that is contrary to "moving money at speed to make wealthy people more wealthy".

[eru]

You make new people wealthy.

[n4r9]

Perhaps some start this way. But in terms of the general trend of talented engineers and mathematicians being sucked into this quant vortex, it is a matter of making wealthy people wealthier.

[lotsofpulp]

Automation in trading makes all investors wealthier via lower fees. Trading costs basically nothing nowadays, and that is because far fewer people are employed to do it.

Obviously, the people who own the automation will want a cut of the rewards, like any other business.

[patmorgan23]

Automation in trading != HFT algorithms

Obviously NASDAQ and electronic trading systems are a good innovation. But firms basically doing arbitrage or exploiting uneven network latency are not that economically productive.

[eru]

And Jane Street isn't a classic HFT either. Speed isn't their differentiating factor (or at least wasn't in the past).

[rank0]

Absurd statement. Use your big brain CS mind for a second. This is you:

> Inefficient market spreads and network latency is not worth remediating.

[andrepd]

> Inneficient market spreads

Well lowering market spreads is all about increasing the returns for capital, and incenctivising overfinancialisation. It's hardly curing cancer is it?

At worst it's actively harmful if you believe that the current state of turbo-financialised capitalism has its drawbacks.

> Network latency

Not really sure what you're talking about but surely spending billions of dollars to bring rtt latencies to 50 micros or whatever is not really a great use of money and top engineering talent. Again, it's playing an arbitrage game but not really delivering any value.

[rank0]

We just have fundamentally different values. People like you are closeted dictators.

I want liquidity, low spreads, price discovery. You seem to forget that “not delivering any value” is just like y’know according to you…

[kqr]

Tighter spreads and higher liquidity is not economically productive? I can see arguments both ways.

[n4r9]

For me, it's about whether that higher liquidity is really worth using top engineering and mathematical talent.

[eru]

Well, that's what we have market price signal for to decide.