How the Speed of a Trade Got Down to Nearly the Speed of Light

The Odd Lots podcast explores the intricacies of high-frequency trading (HFT) with Donald Mackenzie, a sociology professor at the University of Edinburgh. The discussion centers on how HFT firms exploit market structures, particularly the speed advantages gained through proximity to exchanges and technological advancements. Mackenzie details the evolution of trading speed, from milliseconds to nanoseconds, and its impact on market dynamics. He also touches on the cultural shift within trading firms, now resembling tech companies, and the division between liquidity providers and takers. The conversation further examines the economic factors limiting the speed race and the broader implications of HFT on market efficiency, drawing parallels with the AI industry's pursuit of scaling.