Coinbase acquires decentralized cryptocurrency trading platform Paradex

> NASDAQ would probably run its own Plasma chain

If they're running a blockchain on their own, doesn't that defeat the point?

> To eliminate _single points of failure, siloing and centralized control_.

No, it just moves the race from getting the first order at the +0.01/-0.01 band placed to getting the first order priced .00000001 better than the top placed before a liquidity-taking order comes in.

There is no really easy way to "get rid of HFT", and it's unclear whether we actually want to do that. Equity trading is very cheap & efficient w/ tiny spreads on everything remotely liquid. Pretty much the only people who get hurt by HFT are big institutional investors (hedge funds, etc) that used to be able to move big blocks of stock without affecting the price as much as they now do. If anything - the pricing is better now. If you own a truckload of oranges and you hear that someone is going around frantically buying up all the oranges at every store, do you not feel like you should consider raising the price of your oranges?

This comment makes me sad. Lots of bad info.

All securities exchanges incur fees, varying based on wherher you’re eating or supplying liquidity. I forget what these are called, but companies like Interactive brokers pass those fees on. Robinhood eats the fees for you.

With coinbase, you pay a 0% fee as long as you use GDAX, which is a no brainer, and place limit orders that are not immediately executable e.g. sell $.01 above the current price or buy $.01 below.

I’m not the parent so I’m not gonna address the tokenization question, but my opinion is that tokenization helps the users (stockholders), but takes power away from centralized exchanges thus the NASDAQ would be kinda crazy to switch to decentralized assets

People already can't naked short sell except in very limited circumstances for market making purposes. It's not as widespread as you think it is. I would suggest reading about Regulation SHO.

People can access a security today, anywhere. By using their broker over the internet.

Can you give specific, real-world examples about how the "friction" is lower? And what precisely do you mean by "friction" - lower cost? ease of use? something else?

I think the criticism from the regulators has to do with the fact that you cannot create something representing a dollar without approval from regulators and without requiring anyone to do KYC - effectively circumventing all KYC/AML systems in place in the traditional financial system.

> For example, fiber optic cables were outdated by microwave feeds several years before the book came out.

That's the issue you have with it? Of all the possible issues, that's the one you think underlines the bad quality of the book?

The fiber lines or microwave feeds or any other technology used is only a minor detail. The meat of the issue is that there are many HFT strategies that don't provide any real tangible service to the market. HFTs race clients to different exchanges, buy assets cheaper and sell them the next millisecond to the same client at higher price, because they can (because the client is slower). They put in fake small orders in order to read market information before anyone else so they can front-run legitimate investors. How is that providing service to the market?

There seems to be a lot of disinformation in the market, and a lot of things that are meant to sound much more complicated than they are. But the bottomline is that if there is a certain strategy X, that complies with the following conditions: 1) It doesn't take positions in the market, doesn't take risk, so it doesn't evaluate underlying assets and does not help price discovery. 2) It gets in the way between two other participants, simplifyingly a buyer and a seller (where the buyer will end up holding an actual invested position for a longer time) 3) Both the buyer and the seller will end up paying more for their trade when the HFTs are executing the strategy X, compared to a case where noone would be executing the strategy X.

Then yes, it's objective to say that the strategy X is a parasite on the market, and does not provide any real value to the society. The value of markets is providing liquidity, distribution of investment value, risk hedging and price discovery. These HFTs (which is a bulk of all HFT strategies) don't do any of that. No real investor will notice a difference of 50 microseconds when executing their trades. No investor is interested in that.

They are not real spreads. They are fake spreads made by HFT bots using small orders. Once a real investor will try to execute on such an order, the HFT bot will either withdraw it (or it will simply get filled because it's a minimum order for the minimum allowed amount), and then the bot will immedately put in another order which will make more money for the HFT and less money for the investor. HFTs will use their fast connections to other markets to make sure that the new order is such that the investor will have no choice but to pay the price, because by the time the investor will try to go to another market to execute the trade cheaper, HFTs will already have been on that other market have front-runned the investor's order.

This is not "providing liquidity". This is parasitic behavior. Not all HFT strategies do this, but many do.