> ...and what value are they providing in the markets...
It used to be that if you wanted to buy a book you would have to wander around town until you found a place that had chosen to stock it. If it was an obscure or specialist book you might have to drive to a different town. You might just be shit out of luck. Nowadays you search for the title on Amazon and it shows up at your door the next morning. When you are done you can sell it again on Amazon with minimal hassle. Amazon improved the efficiency and liquidity of the book market which is why they are rich, even though they are charging less overhead than the bookstores.
Your local corner store doesn't create anything. All they do is buy from manufacturers and sell to you at a markup. But you don't care about spending an extra few pennies when its 6am and you're out of milk. You just want breakfast now.
Liquidity providers make it easier to buy and sell financial instruments whenever you want. HFT enables firms to provide liquidity more efficiently and with less risk. Just like Amazon, they get rich by saving you money.
It used to be that if you wanted to buy a book you would have to wander around town until you found a place that had chosen to stock it. If it was an obscure or specialist book you might have to drive to a different town. You might just be shit out of luck. Nowadays you search for the title on Amazon and it shows up at your door the next morning. When you are done you can sell it again on Amazon with minimal hassle. Amazon improved the efficiency and liquidity of the book market which is why they are rich, even though they are charging less overhead than the bookstores.
Your local corner store doesn't create anything. All they do is buy from manufacturers and sell to you at a markup. But you don't care about spending an extra few pennies when its 6am and you're out of milk. You just want breakfast now.
Liquidity providers make it easier to buy and sell financial instruments whenever you want. HFT enables firms to provide liquidity more efficiently and with less risk. Just like Amazon, they get rich by saving you money.