The main reason they compete on speed is because it's illegal to compete on price. Abolish the sub-penny rule and it'd go back to being boring market plumbing.
This isn't really a good take: many markets do not trade one tick wide in the first place and people are still competing on speed. Delta neutral trading is a zero sum game and no matter what rules you put in place it will still be incredibly cut-throat.
Moreover at this point speed is a commodity, if you're willing to shell out cash, you can get access to top tier infra right out of the gate. The real game is not how fast you are (though obviously that's important too), but how smart you can be while maintaining good tick-to-trade latency.
Trading has never been a vanilla/boring business and it likely never will be either.
> many markets do not trade one tick wide in the first place and people are still competing on speed
True but not something that I find compelling. If you can only compete on price in penny increments, then you'd have to be hugely more confident to undercut a 1c spread with a 2c spread; if you could offer a 1.8c spread by taking a little more time over your calculations, that would change things.
> Delta neutral trading is a zero sum game and no matter what rules you put in place it will still be incredibly cut-throat.
I mean yes, to the extent that there's profit in it at all. But the profits have already been shrinking year-on-year. Plenty of mature industries like supermarkets are utterly cut-throat, but don't bother regular people.
> Moreover at this point speed is a commodity, if you're willing to shell out cash, you can get access to top tier infra right out of the gate. The real game is not how fast you are (though obviously that's important too), but how smart you can be while maintaining good tick-to-trade latency.
Well, it's the same thing, like the project management triangle - you can always trade quality for speed and vice versa, the hard part is when you want to improve both. But I do agree that at this point a lot more of it is known quantities and techniques.
> Trading has never been a vanilla/boring business and it likely never will be either.
My sense is that it's no longer where the best and the brightest go (and as I said before, profits are shrinking a lot). More and more of it is commodified. Which is what we should expect from any industry, honestly - at some point things are new and exciting and profitable, then they become mature and less so.
