3 years ago a user aptly named "hft" discussed some ins and outs of high frequency trading. At that time, there appeared to be a handful of HFTers on board here. Now it's crickets.
I wonder if even he could have foreseen such a dramatic shift in the landscape. Margins have continued to compress and data, infra, and regulatory costs have continued to rise. Low hanging fruit that dumb algos once fed off is drying up. Equity volumes continue to decline. Everyone has FPGA devs and microwave links. Meanwhile, some HFT have exited various asset classes and/or regions, or gone belly up altogether.
CME rolled out its upgraded gateway providing "fairer" time priority. Presumably making some trades much more winner-take-all. Also not long after that post, CME stopped providing participants with their fills before they hit the public feed.
Regulators have more actively pursued cases against spoofers. Manual traders really, but HFTs continue to receive scrutiny and be questioned over spoofing for legitimate order cancellations. HFTs also continue to fight off the notion that they are parasites feeding off "latency arbitrage."
IEX has been approved as a U.S. equity exchange and will have a protected quote starting next month. IEX is supposed to save us from HFT yet they themselves promote and offer complex order types. Other U.S. exchanges are looking into introducing their own speed bumps.
The SEC has established a Market Structure Committee to review and figure out ways to improve U.S. equity market structure. Tick pilots, access fee pilots, and more are on the way. Open issues still include the validity of Reg NMS Rule 610 (primarily as it relates to order protection), limit up limit down refinements and intermarket harmonization, and payment for order flow.
Democrats have promoted the idea of a FTT which would destroy HFT, trading, and liquidity as we know it.
The HFT space has matured quite a bit and it isn't a rosy picture. Yes, the strongest will survive and continue to have no or close to no losing days. Speed will continue to be important, but less so as a pure edge itself and more as a requirement for all trade execution. This isn't just applicable to HFTs, but also to institutions who are now partnering with HFTs in hopes of reducing their slippage.
So ETers, how do you view HFT today and where do you see it headed?
And for those of you who work for an HFT, what changes have you seen in the last few years and how are your firms adapting?
I wonder if even he could have foreseen such a dramatic shift in the landscape. Margins have continued to compress and data, infra, and regulatory costs have continued to rise. Low hanging fruit that dumb algos once fed off is drying up. Equity volumes continue to decline. Everyone has FPGA devs and microwave links. Meanwhile, some HFT have exited various asset classes and/or regions, or gone belly up altogether.
CME rolled out its upgraded gateway providing "fairer" time priority. Presumably making some trades much more winner-take-all. Also not long after that post, CME stopped providing participants with their fills before they hit the public feed.
Regulators have more actively pursued cases against spoofers. Manual traders really, but HFTs continue to receive scrutiny and be questioned over spoofing for legitimate order cancellations. HFTs also continue to fight off the notion that they are parasites feeding off "latency arbitrage."
IEX has been approved as a U.S. equity exchange and will have a protected quote starting next month. IEX is supposed to save us from HFT yet they themselves promote and offer complex order types. Other U.S. exchanges are looking into introducing their own speed bumps.
The SEC has established a Market Structure Committee to review and figure out ways to improve U.S. equity market structure. Tick pilots, access fee pilots, and more are on the way. Open issues still include the validity of Reg NMS Rule 610 (primarily as it relates to order protection), limit up limit down refinements and intermarket harmonization, and payment for order flow.
Democrats have promoted the idea of a FTT which would destroy HFT, trading, and liquidity as we know it.
The HFT space has matured quite a bit and it isn't a rosy picture. Yes, the strongest will survive and continue to have no or close to no losing days. Speed will continue to be important, but less so as a pure edge itself and more as a requirement for all trade execution. This isn't just applicable to HFTs, but also to institutions who are now partnering with HFTs in hopes of reducing their slippage.
So ETers, how do you view HFT today and where do you see it headed?
And for those of you who work for an HFT, what changes have you seen in the last few years and how are your firms adapting?
