From mboxrd@z Thu Jan 1 00:00:00 1970 Return-Path: X-Spam-Checker-Version: SpamAssassin 3.1.3 (2006-06-01) on yquem.inria.fr X-Spam-Level: ** X-Spam-Status: No, score=2.1 required=5.0 tests=AWL,DNS_FROM_RFC_POST, SPF_NEUTRAL autolearn=disabled version=3.1.3 X-Original-To: caml-list@yquem.inria.fr Delivered-To: caml-list@yquem.inria.fr Received: from mail1-relais-roc.national.inria.fr (mail1-relais-roc.national.inria.fr [192.134.164.82]) by yquem.inria.fr (Postfix) with ESMTP id BEE9BBBC4 for ; Mon, 16 Mar 2009 16:31:53 +0100 (CET) X-IronPort-Anti-Spam-Filtered: true X-IronPort-Anti-Spam-Result: Ao0CAFcNvklKfS4eimdsb2JhbACCfpIFPwEBAQoJDAcPBbILgQeNQAEDAQOCOYFDBg X-IronPort-AV: E=Sophos;i="4.38,373,1233529200"; d="scan'208";a="25673220" Received: from yw-out-2324.google.com ([74.125.46.30]) by mail1-smtp-roc.national.inria.fr with ESMTP; 16 Mar 2009 16:31:53 +0100 Received: by yw-out-2324.google.com with SMTP id 2so792853ywt.3 for ; Mon, 16 Mar 2009 08:31:52 -0700 (PDT) DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=gmail.com; s=gamma; h=domainkey-signature:mime-version:received:in-reply-to:references :date:message-id:subject:from:to:cc:content-type :content-transfer-encoding; bh=nvtrkk2l1XQyw0q8JFZn5lH41HyAaoopaTWBclVMB7M=; b=oYzOiqzEBoT7MSjSufU/34bJtQq7fhVnxI9a4r9LpSXv3N//HAq3bXXytggIsypW21 tCPxsR0SuD8+27wmbbX6l9AUA9XKg8m6zIxJyn8Y+Hzl4Tk5mxsxsV0hjzPzcdEIFKCf ccouaiQfnok3fL3TBOp+8B1SOKF5LVtK6bTew= DomainKey-Signature: a=rsa-sha1; c=nofws; d=gmail.com; s=gamma; h=mime-version:in-reply-to:references:date:message-id:subject:from:to :cc:content-type:content-transfer-encoding; b=xi/tDC9U5lw4HyDmdaYw1EcQlUWPk+uATnyfS30NRyJvhdxqc9tYaRj62BkvnFbX7X vlH7sEPEnrtS6kt3Nk5gkeZWLEVxvGJp7KPahM6G8O7CSqFHTB2ABRv79btBito6ds53 MtVvbbCFgTrRTfWGPrRDzud7jTPsL37GM+mrI= MIME-Version: 1.0 Received: by 10.90.84.17 with SMTP id h17mr571807agb.31.1237217512136; Mon, 16 Mar 2009 08:31:52 -0700 (PDT) In-Reply-To: <87d4chy29p.fsf@aryx.cs.uiuc.edu> References: <891bd3390903131252t7feb059aq94f56b0a4d2efbf3@mail.gmail.com> <87hc1wyl9q.fsf@aryx.cs.uiuc.edu> <891bd3390903141025w3d0580dbgf97ab4f40386903d@mail.gmail.com> <87d4chy29p.fsf@aryx.cs.uiuc.edu> Date: Mon, 16 Mar 2009 11:31:52 -0400 Message-ID: Subject: Re: [Caml-list] caml trading From: Markus Mottl To: Yoann Padioleau Cc: yminsky@gmail.com, caml-list@yquem.inria.fr Content-Type: text/plain; charset=ISO-8859-1 Content-Transfer-Encoding: 7bit X-Spam: no; 0.00; markus:01 mottl:01 markus:01 mottl:01 on-topic:01 subjective:01 fairness:01 milliseconds:01 ocaml:01 wikipedia:01 ocaml:01 2009:98 arbitrage:98 trader:98 grocery:98 On Mon, Mar 16, 2009 at 10:24, Yoann Padioleau wrote: > I did watch the video, that's why I asked the question. From the video > it sounds like your are buying and selling things on the market > at the micro-second level. I don't see any value, any wealth created > doing that. The only thing that come to my mind is that there should > be a law that forbid such micro-transactions. I can see the > value of banks, of investors, I don't understand the value > of "arbitrage". To make money flow better ? ... This is clearly not on-topic for this list, but since it may be of interest to OCaml-developers who want to work with us, let me quickly dispel this unfortunately very common misconception concerning the way markets work and what the actual service is that market makers / traders like us (and in general) provide. First of all, what do you think would be a "fair" average period that traders should hold their positions? Ten years? Three months? One nanosecond? It's clear that different people might have different subjective opinions on fairness so any of the above would then just be an arbitrary choice. But there are clearly economic reasons for transaction speed. E.g. a trader in a grocery store surely won't buy and sell apples within milliseconds. Even if it were physically possible, we would certainly expect that the required infrastructure would be too expensive. It is hard to imagine that the added benefit in more accurately meeting demand for apples is big enough that customers would be willing to pay the extra cost for that level of service. Thus here we have it: cost and profit, these are the determinants of how fast you should trade. It is costly for us to be able to trade fast: you may need to buy very expensive computer equipment, pay a lot of money for realtime financial information, and, most importantly, hire good OCaml hackers (a rare species!). As long as the extra cost of investment is at least compensated by extra profits (look up "marginalism" on Wikipedia), it is economically advisable to trade faster. What is now the added benefit for society? How do you personally benefit from companies like ours? This is easily explained, just imagine we did not exist. We can only be profitable by providing better prices than competitors, otherwise nobody would trade with us on a given market. Therefore, if we didn't exist, you would have to pay a higher price to somebody else. Same if you want to sell again: you would receive less for your investment from a competitor, thus making you worse off. Thus, besides providing wonderful jobs for OCaml-hackers, our company makes it cheaper for people to invest their hard-earned money by providing extra liquidity on financial markets. Regards, Markus -- Markus Mottl http://www.ocaml.info markus.mottl@gmail.com