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Comment by mverwijs | Hacker News Reader

I worked for the biggest market maker in Europe for three years, from 2008 through to 2011.

My experience disagrees with every statement you made, except the job fulfilling part.

Making markets does not add any value to anyone other than the marketmakers and the stock exchanges.

The only decent thing about those places is that they usually do not beat around the bush. "Does your idea help us be faster? Got proof? Go implement. Money is no objection."

Morals did not exist in that world when I was there.

What I was doing, was helping the 0.01% consolidate their power and wealth at the cost of all other living beings on this one habitable planet.

Then I stopped kidding myself and got out of my golden cage.

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> Making markets does not add any value to anyone other than the marketmakers and the stock exchanges.

Could you elaborate on this statement? It is my understanding that the value market markers provide is liquidity and tighter spreads. Worst case, they pull orders when informed volume is detected, but then the book is no worse off than what it would be if the market makers weren't there.

Yes they provide liquidity. But that is not the reason traders become market makers.

The liquidity is something that the exchanges want so they can provide better services to their other users / customers.

What the market makers get in return is some privileges on the exchange, such as favorable credit exempts or short sale treatments. This depends on the exchange.

But being a marketmaker, basically obliging to be able to quote a price on anything and everything, is regarded as much as a nuisance as it is a benefit.

Liquidity reduces the cost of trading for everyone, which is something you can just empirically verify. What do we care what someone's motivation for doing it is? Presumably everyone's motivation in finance is to make money.

> Liquidity reduces the cost of trading for everyone,

Yes. And I do not see this as a boon. It reduces the cost of trading for traders at the expense of _everything_else_.

Eg: search for 'whack bully oil prices'.

Not OP, but I think of jobs like theirs as being about marginal utility - how much better off is the world if trades are executed .001 seconds faster? It seems that for a lot of jobs the answer is not at all.

I agree.

The traders are better off than those whose trades are executed 0,001 seconds slower. That’s why they make it faster.

I don't want to just come out and say you're wrong bluntly but...well this debate has happened on HN many times. I'm a little shocked you worked in the industry and can seriously assert all marketing does is consolidate the power of the top n%. More than just about any other service in finance (except maybe credit/lending and consumer banking), market making drives prices down for everyone. It's a prime vehicle for delivering efficiency.

I can understand arguments that the work wasn't fulfilling, or you didn't enjoy your colleagues...but what you're saying seems to be incorrect, strictly speaking. Were you working in marketing making where most/all trades were OTC?

Well - ok - I may have overstated in that: Yes, market making provides more liquidity. Yes, it makes it more efficient. Yes, for everyone, not just the marketmakers and exchanges.

But no, this is not the reason marketmakers make markets.

They do this in order to make more profit.

The rest is a side effect that they happily spindoctor into their "raison d'etre".

The company I worked for is known for being the primary source of rich people in the Netherlands. And they keep getting richer. Very much the so-called 1%.

And a disclaimer: I'm an engineer. Not a trader.

Optiver, I presume? I was almost lured into working for them too, being blinded by the high tech playground that it seemed to be. Regarding the adding value, they defend their right to exist as "because of us, instruments are priced properly everywhere and that's good for everyone", isn't it?

I'm sure they do, and that's an axiomatic statement that can be horribly, catastrophically wrong but makes them feel better about their lives.

Never underestimate the very human emotional motivation of coming up with a pleasing rationalization. Just because someone earnestly says 'we are helping, so much!' doesn't mean they're correct.

I experienced it exactly as you describe.

To me this argument always came across as fabricated and empty.

I have seen too many examples internally at that place, where the (to me) obvious moral choice was neglected or even laughed at.

The "because of us, instruments are priced properly everywhere and that's good for everyone" is interesting.

Does that result solely exist because of us making a market? What is 'properly priced' exactly and why would it be a Bad Thing if it were less 'properly priced'? And why is this even a goal that should be pursued? And should that goal be pursued at all (and I do mean ALL) cost?

Those questions were never answered to my satisfaction.

Exactly, that was my experience too. People who were very capable of analytical rigor around cost/benefit tradeoffs suddenly became very handwavey when it came time to analyze whether the company generated enough social benefit to justify level of profit.

One of my ex was a commodity trader in another big player, Cargill. She was not the most moral being to start with (you simply can't be a successful moral trader, period), but even for her trading with edible commodities was the worst moral shithole - your success would easily help cause hundreds/thousands of deaths in some famine/disaster stricken place, usually in Africa.

She was in energy and oil instead - her success would mean that down the line, we all would pay up a bit for her success (selling expensively when demand was high). And also with oil, she would be trying to create as cheap gas/diesel from oil as possible (meaning passing regulations in some 3rd world country), it took her easily 10 fails to get just slightly above the (very low) bar. The result - engines destroyed over time with crappy fuel, environment polluted with less-than-ideal material burned. But nobody gave a nano-fraction of a fck, it was Africa.

Yeah, traders, they think super high about themselves, most are properly broken human beings, a pure net loss for humanity

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