AllanHoustonSt

That’s pretty metal.

There is trading activity in the milliseconds-seconds horizon as well. I'm sure all the big HFT players participate plenty. These just wouldn't be considered MM strategies.

Your original question was why MMs have to operate at HFT horizons. MMs by definition are liquidity providers (which means high availability and high volume at competitive prices). In some cases (DMMs) they're legally obligated to do so at some well defined baseline. And in that specific context HFT speeds are required.

I guess I would say, it depends?

Existing profitable MMs aren't all equally fast. So the slower ones that trade on the same exchanges or even the same indices have to be profitably trading at a wider spread.

HFT isn't a concrete term so I guess technically there's no hard line to draw for how fast your roundtrip times have to be to be profitable. But if you are trading wide enough where you think latency isn't a factor, aren't you really just predicting where you think the book will go "far" ahead in the future? MM is inherently a reactionary business (with some effort put into anticipating the price moving against you in the very very short term).

Traders (be it hedge funds, props, retail, anyone) will only "take your action" if you price competitively. You'll never get your orders filled. The open bid and ask as per whatever the exchange quotes are really the only prices that matter when it comes to what actually gets executed.

Also even if you do quote wider, to effectively capture the spread, your buy on one side and your sell on the other side still have to basically occur simultaneously which is where the demand for latency comes in so you really can't escape it.

That said there are ways to still be profitable even if you know you're not the fastest gun in the west across the most exchanges. Without going into too many details you'd have to selectively choose where/what you trade. Which is not trivial at all of course.

The industry as a whole provides net value to the market by via higher liquidity and tighter spreads.

The arms race is a necessity due to rising competition. HFTs cannibalize each other every year. People on the outside seem to think being in HFT inherently means you’re printing money but they don’t acknowledge how tough the business actually is. Many firms have either collapsed or have been bought out over the past decade.

Market makers specifically (who inherently have to operate in HFT time horizons) don't even compete with low-mid frequency hedge funds and props. They don't compete with retail investors. They strictly compete against other MMs to capture the spread.

You’d be surprised at how many traders and QRs in HFT (or at least in OMM) often reach for Excel. Granted this is way more common among older people in the industry. And as a technologist OP wouldn’t have to worry about writing or maintaining Excel scripts :p

I continually find myself amazed with what people can do with Excel.

Which popular H1B source countries teach COBOL? I feel like the advent of cheap offshore programming came well after the decline of COBOL. Though my sense of history can very well be off.

Live tells aren’t taken that seriously or considered a significant factor outside of laymen.

That said I do think the dynamics of poker change more than most other board/card/table games when going from live to online or vice versa, with my extremely limited understanding of chess, go, and Magic.

I remember seeing murmurings of this on reddit. Cool to see it’s a paper now, thanks for sharing.

I personally wouldn’t mind seeing the language go the “editions” route a la Rust.

I feel like self checkout kiosks already solve this. Commodotized Amazon Go tech is a minute improvement in convenience compared to traditional cashier -> self checkout.