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A comment on Banning Some HFT Strategies Helped This Market Grow: Chart. Parent comment

Re:Banning Some HFT Strategies Helped This Market Grow: Chart by fr0sty on Tuesday March 08, 2016 @11:49AM (#11246445)
> At least that's what the models show.

What models? Increasing the amount of risk a market maker must bear will widen the quoted spreads not narrow them since that increased risk needs to be priced in.

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Re:Banning Some HFT Strategies Helped This Market Grow: Chart by cdetrio on Tuesday March 08, 2016 @12:51PM (#11246998)
The models in the "Frequent batch auctions as a market design response to HFT" paper by Budish et. al.; i linked the slides in another comment.

Since batch auctions use single-price clearing, market makers can post bids and asks without fear of being sniped (so its less risk, not more). And since you can't snipe, they have to compete on price rather than investing in faster connections, resulting in narrower spreads.

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