Brett Harrison: preference

Transcript context

…Price dynamics that is so fascinating. But this actually raises an interesting question. If you have some sort of algorithm like this that gets you a few nanoseconds faster to the Nasdaq Exchange, and that's why you have Edge, or you've leased microwave towers to get from New Jersey to Chicago faster, or you've bought an expensive server in the same place that Nasdaq is housed. What fundamentally is the advantage to society as a whole from us getting that sort of information faster? Is this just sort of a zero sum game of who can get that incorporate that signal faster. Like, why is it good for society that so much, so many resources and so much brain power is spent on these kinds of hacks and these kinds of optimizations? Yeah. So I think if you start from the premise that having liquid, tight, efficient markets is important for the world and you say, like, how do I design a system that optimizes for that? I think you want smart, sophisticated technologies competing at the margins. And of course, the more they compete, the smaller the margins become to the point where you think, like, the little extra activity people are doing to get slightly better don't seem to be greatly affecting the whole system as much as if as it was in the earlier days when things were slower and tick sizes were wider. I think it's difficult to imagine designing a market where you say, like, okay, everyone should innovate up until this point and then stop competing and then just stay stasis. And maybe you can create certain regulatory or market structures to try to prevent that. But I think on average you want people competing at the margins, even if they seem like they are minuscule. But at the same time, I think it's not zero sum for society for technologists to be creating super fast, ultralow latency, very sophisticated algorithms. Like maybe, I don't know, we have a lot of geopolitical instability in the world. Who knows if our microwave network that we built out in the US. Could have greater use cases than just for quantitative finance? But the quantitative finance subsidized the creation of these towers. Okay? So that's sort of like a contingent potential benefit. People tell us a little story about NASA, right, in this case, literally microwaves that they subsidize a lot of the science that ended up becoming becoming into products. So that's an interesting account of the benefits of finance, that it has the same yeah, whatever tricks they come up with might be useful elsewhere. But that's not a story about how it's directly useful to have nanosecond level latency for filing your Apple stock or something like that. Why is that useful directly?…

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