A Gazillion-Dollar Standoff over Two High-Frequency Trading Towers

Re:A Gazillion-Dollar Standoff over Two High-Frequency Tradi... by pcr0 on Sunday March 10, 2019 @08:21PM (#19355704)

HFT firms perform a different kind of front running. If I'm an HFT firm and I see a large buy order on the books at exchange A, I can use my low-latency links to exchanges B, C to execute my own buy orders there before the rest of the market reacts.

It's not illegal, but it is still front-running the rest of the market due to latency arbitrage. Check out Flash Boys by Michael Lewis for more on the topic.

[ Parent | on HN ]

Re:A Gazillion-Dollar Standoff over Two High-Frequency Tradi... by growse on Sunday March 10, 2019 @08:27PM (#19355742)

This isn't a definition of front running that anyone in the industry uses.

As you say, this is just arbitrage on public information. Latency arbitrage has been occurring for the last 200 years at least, it's an inevitable outcome of any system with multiple, geographicly separated markets.

P.S. I read Flash Boys. It's not very good.

[ Parent | on HN ]

Re:A Gazillion-Dollar Standoff over Two High-Frequency Tradi... by QuackingJimbo on Sunday March 10, 2019 @09:57PM (#19356117)

This hypothetical HFT firm is part of "the rest of the market reacting"

They just happen to be the first among all participants to react. Why is that bad? Somebody has to be first

[ Parent | on HN ]

Re:A Gazillion-Dollar Standoff over Two High-Frequency Tradi... by jm__87 on Sunday March 10, 2019 @11:32PM (#19356445)

Perhaps I have misunderstood what front running is, but I have always thought it is really only applicable when you have an obligation to your clients to give them good execution. You can't front run a market, just your clients. An HFT has no clients on behalf of which they are executing trades, they are just trading for their own account.

[ Parent | on HN ]