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Comment by zie | Hacker News Reader

They provide market liquidity. The chances that a seller and buyer come together at the exact same time across the 7.5 hours of open market operations is fairly low, so they buy from sellers and sell to buyers and hold in between to keep the markets liquid. This liquidity costs(often advertised as the bid/ask spread).

We could essentially close them down if we moved all trading to say 1 hour a day.

Though most retail traders are upset they can only trade 7.5hrs a day, they want to trade 24/7 instead. They seem to WANT the liquidity and are apparently willing to pay for it.

Me, I'm fine with trading for only an hour a day, but I get not everyone is as lackadaisical as me.

Unless you have a better mouse trap to solve the liquidity problem, this is the best we have for now.

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> They provide market liquidity.

I actually know a little about this space. You know what the easiest response is that is always the answer?

"We provide liquidity".

Sounds important, most people don't get it, it works.

But it's not like the market is going to grind to a halt if Jane Street disappears overnight. Of course, people will say that. Not people telling you the truth.

I actually considered "but, but, THE LIQUIDITY!" in my answer but I felt there was sufficient snark.

Agreed, orders maybe wouldn't fill quite as fast, but it's not like markets would fall over and die.

Yes they would. It would be a significant and catastrophic mistake to restrict trading based on feelings of envy. It would be technically negative in every measurement possible.

So many poor policies originate from Envy and poor reasoning not grounded in logic and understanding of free markets and economics. This would be yet another classic example of that.

As we have talked about in the other part of this thread, envy has absolutely nothing to do with it. Stop thinking it does. You are starting to sound like a broken record.

> It would be technically negative in every measurement possible.

Since you believe this so strongly, can you provide academic sources for this perspective?

> envy has absolutely nothing to do with it

Please do tell me then, what exactly motivates all the proposals for restricting trading periods or changing to auctions? All I have seen is that Jane Street and other make “too much money”. The reality is actually different they provide a service in 20 countries across all asset classes and do it for only $12B/year, that’s actually very cheap once the scope of their reach and operations are understood.

Please explain what is the motivation other than envy behind the numerous comments proposing some restrictions or claiming they aren’t worse or even better.

There are definitely academic sources that will backup my assertions however the irony is that my position somehow needs to be defended when it’s actually obvious to anyone who has spent a lifetime on the inside of the very system we are discussing and that somehow absurdist proposals about restricting market hours are accepted on face value without any rational or academic evidence whatsoever.

> They provide market liquidity.

That's funny, people say the same thing about ticket scalpers.

Event tickets are not usually subject to market forces, for good reason.

Don’t they?

Artists set too low of prices because they don’t want to be thought of as greedy. Scalpers expose the true market rate of the goods.

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