[ViscountPenguin]

As someone who has worked in the industry, I've yet to see any compelling argument that high frequency quants are making any meaningful contribution to society. Maybe on the low frequency end, but slightly higher market liquidity doesn't serve that large a social good imo.

[JasonADrury]

High frequency quants almost certainly don't directly provide a massive social good, but they're one of the many facilitators enabling the smooth functioning of markets that do.

But FWIW, the comment I was replying didn't seem to be specifically critical of high frequency quants. Dismissing the entire field as something that doesn't contribute to society is beyond absurd.

[ViscountPenguin]

The context of the comment being a Jane Street blog post is why I singled out HFT.

I think we're probably roughly in alignment w.r.t. other forms of finance, but the market liquidity gained by a marginal HFT employee almost certainly isn't worth the marginal cost imo. Even in finance, you could do a lot better by expending that human capital into optimising the structure of the markets themselves (there's lots of research on how hideously inefficient the TSE is because of its coarse tick sizes, for example; but vested interests get in the way of fixing that).

[lesam]

If markets were regulated to trade in coordinated 1s auctions, instead of nanosecond precision first-come-first-served matching of orders, markets would function just as well without needing a ton of what the HFT crowd does. It's a massive waste of brilliant minds.

[JasonADrury]

Where does the liquidity come from? You'd get rid of HFTs but you would still need market makers

[throwaw12]

> facilitators enabling the smooth functioning of markets that do

Do you think without HFT markets stop functioning properly?

What if they are one of the contributors of highly inflated valuations?

[vecter]

HFT doesn't inflate or deflate any valuations. They operate at the market microstructure level and provide liquidity. HFT firms have no impact on the long-term value of assets.

[patmorgan23]

HFTs can siphon away profits from the people actually doing good investing, but Not all HFT is created equal. There have been some pretty high profile instances where HFTs have increased market volatility and caused a "flash crash".

HFTs that trade at the microsecond scale probably aren't valuable to society.

[vecter]

That's all factually incorrect. The reason that HFT is valuable to society is exactly because it trades at the microsecond scale. That's how it provides the most liquidity.

Flash crash was transient and had no impact long term value. Neither does volatility.

[bumby]

I didn’t read the OP as being entirely dismissive, but rather making a point about relative impact.

You could make the case that a neurosurgeon is contributing to the field by being a full-time reviewer of a research journal; like a quant, they are providing utility by assisting in the flow of information. But I suspect there are many people like me who think they would have a bigger impact by putting on scrubs and working in an operating room.

[idiotsecant]

Moving money from one pile to another is only useful when the rest of us do actual work. The mistake that the west is making is assuming moving piles of money from one place to another is the actual work.

There is no value in pure finance.

[JasonADrury]

You can't live in a vacuum, and you'll struggle to find a career in "pure finance".

> The mistake that the west is making is assuming moving piles of money from one place to another is the actual work.

Nobody assumes that.