
Why even mid-sized trading firms are hurting - wglb
http://www.chicagobusiness.com/article/20150228/ISSUE01/302289980/why-even-mid-sized-trading-firms-are-hurting
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afarrell
Is there more nuance to this story than "a lot of players rushed into a
sector, commoditizing it and meaning that only a few large players could
ultimately survive the race to the bottom"?

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kasey_junk
No

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pseudometa
For companies who are paid to analyze and predict the future, it seems they
should have seen this coming from the outset.

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kasey_junk
Trading companies (especially like the ones mentioned here) are not paid to
analyze or predict the future. They are largely paid to accurately price short
term risk of holding particular financial instruments.

This actually leads to some situations where they can be worse at predicting
large trends.

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Mikeb85
When everyone does arbitrage, eventually the markets will become very, very
efficient, and profits converge on $0. Of course, they'll never get there
because market participants will drop out (as we're seeing), but this was
always the likely end result.

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arca_vorago
It's not about lack of funds to hire the bright minds, it's because that's how
the system is designed in the first place. The problem is that technologies
such a HFT have simply accelerated the removal of the middle men, because now
that the uber-wealthy have squeezed as much money out of the proletariat, they
need need a new feeding ground. That feeding ground is the middle-upper class,
the ones who think they are one of the good ol boys but are gonna get bitten
just as hard, they just don't realize it yet. This goes for "middle-class
business" too. The SEC is flattened under the weight of regulatory capture and
insider trading is the norm. How could any other outcome than referenced in
the article be expected?

Class warfare is real and is going on right now, and the bankers and uber-
wealthy (.01%) are winning.

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tptacek
Am I reading correctly that you think the elimination of middle-men in the
market is a _bad_ thing?

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blumkvist
Middle man has come to have such a bad connotation these days. I think
majority of people imagine middle men like some crooks who make a phone call
or two and take a 20% cut for no work at all.

This couldn't be further than the truth.

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tptacek
Ok but we're clear that _these particular middle-men_ , the human specialists
that electronic market makers replaced, _were in fact crooks_ , right?

