What the Interns Have Wrought, 2025
Original: What the interns have wrought, 2025
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The tech wizardry behind high-frequency trading (HFT) firms like Jane Street has sparked a lively debate, with some commenters questioning the societal value of their complex algorithms and others defending their role in providing market liquidity. While some, like logicchains, argue that HFT competition lowers spreads and benefits retailers and institutions, others, like KHRZ and Balinares, lament that the ultimate goal is simply to make money, with Balinares noting that the societal value doesn't justify the enormous profits. As the discussion unfolds, it becomes clear that opinions are sharply divided, with some, like dn97 and infecto, highlighting the importance of market makers in efficiently allocating capital, while others, like Shacklz and blargey, remain skeptical about the real-world impact. The thread feels relevant now as it shines a light on the often-opaque world of HFT and challenges readers to consider the true value of this advanced tech.
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Suppose you want to invest in S&p500 so you want to buy the ETF. Someone like Jane Street can create sell you this ETF, and take care of the risk that comes along with it. For example, the price they sell you this ETF should take into account the pricing of underlying stocks. While it sounds trivial, doing this profitably (and therefore sustainably) is a tough job. And doing it competitively to offer you a good price on it is an even tougher job.
Ultimately companies like Jane Street have no moral rudder and it is a waste of talent for smart young people to work for them, but we are so far beyond such considerations at this point that it sounds naive to even suggest that maybe talented people should work on things that make society better for everyone and care about the moral implications of their work. Instead everyone is looking for a way to contribute to the coming dystopia in whatever way they can because that's where the money is.
You may not like it but we function in a capitalist society and as such the efficiency of markets is part of that. To have that happen usually requires the market as a whole participating and that includes firms like Jane Street. In the India case I don’t know if what they were doing was illegal or not, India is complicated and the laws there in my opinion are influenced not as much by standards but how well you scratch the itch of others. It is clear the option markets in India was/is highly inefficient in that Jane Street was able to pull the rug over and over. I would be curious who the counter parties were and if this is more about pride of Indian financial institutions not being competent instead of this being illegal. Thinking more about Hindenburg and how India reacted. In the US it feels like a gray area because at the end of the day the options market was clearly clueless on how they should be pricing the options.
Speaking from a US perspective people get thorny on these topics but I think it’s great that folks are always pushing the boundaries. This type of law is tested and we figure out what is ok and what is not. It’s often not cut and dry. Maybe Jane Street was entirely in the wrong in India and they will pay a price. Maybe not. Hopefully their markets learn and benefit from it.
I don’t believe any of us are in a position to say how folks should be spending their time. If we went down that road we could probably argue it back to nobody should be working and should simply be farming for our own food.
Money is debt, you can’t make it without someone else owing it. Taking billions in profits from India’s stock market is pretty straightforward, millions of Indians lost their savings.
Edit: I don’t think my point was clear. If you are going to allow retail in the options market, you should also be ok with sophisticated actors participating in it.
But the idea that smart people should "push the boundaries" to find out "what is ok and what is not" is either naive or borderline sociopathic IMNSHO.
Before throwing around labels like “naive” or “sociopath,” it’s worth recognizing that a capitalist system relies on efficient markets, and efficient markets depend on laws being tested and clarified through the courts. That process benefits everyone.
I’m not making an ethical defense of any specific behavior. I’m saying that just because someone benefits from mispricing in a market doesn’t automatically make it unethical. The courts help define those boundaries. If you reject that premise and prefer a system without capitalism, then we’re simply talking past each other.
And for what it’s worth, tossing out loaded terms like “naive” or “sociopath” isn’t exactly an argument, it’s just lazy rhetoric. It’s ok for us to disagree but why use such a lazy argument?
I do however believe that gaming the system for personal profit is unethical. The intention of the law might have been to build a playground for people to enrich themselves, but from a Christian standpoint, I don 't think this always works out well for society. I'm not a Christian, but I do like some of its values.
I was a bit disappointed about the suggestion that capitalism requires certain things that make Jane Street a necessity. This is not a fact, nor does the current process benefit everyone equally. Rejecting that notion, and possibly reading a bit too much into that, is what caused me to use said terms.
I do agree that we are probably talking past each other though :)
We obviously can't tell people how to spend their time, but we can point out that there might be moral reasons to avoid working in industries and for companies with particularly strong negative impacts on society.
> If we went down that road we could probably argue it back to nobody should be working and should simply be farming for our own food.
This is a classic false dichotomy. There are an infinite number of middle grounds between farming for our own food and an ultracapitalist dystopia in which morality is replaced by profit.
You’re right that there are middle grounds between subsistence farming and some caricature of ultracapitalism, but deciding where to draw that line in practice is messy. Pretending it’s obvious which industries are “moral” and which aren’t usually says more about someone’s priors than it does about some universal ethical framework.
At the end of the day, efficient allocation of capital, imperfect as it is, is what makes the system work. It drives productivity gains, lowers costs, and ultimately raises living standards across the board.
One big problem is that such claims are often cover for what amounts to theft. PE companies loading acquisitions with debt, for example, or "enshittification" - both tactics which are optimized to transfer wealth to investors, not improve the overall allocation of capital.
The idea that all these shenanigans are "efficient allocation of capital" is just propaganda, left over from decades ago before the system became what it is today.
This is where you need government intervention and controls, but unfortunately the US government is structurally and systemically unable to provide that. Regulatory capture, legalized corruption ("campaign finance", "lobbying"), money as speech, corporations as people - none of this is morally sound, and the justification that it's all in service of "productivity gains, lower costs" etc. is hollow.
> but deciding where to draw that line in practice is messy.
Of course - that's the nature of morality, it's inherently political. There would be no morality without other people. But that doesn't mean we should throw up our hands and give up on it.
I think what OP meant is that producing all this fancy advanced tech just to play the financial game isn't all that much benefit for society.
And when looking at societal development in the last couple of decades with the increasing gap in distribution of wealth, social mobility and overall life expectancy declining and other such metrics, I think it's a valid standpoint that maybe, the collective smarts of our society could be allocated a bit better than putting them into companies like Jane Street; as impressive as their work is.
The notion that efficient markets require firms like Jane Street to endlessly chase extra "edges" is a false dichotomy. The world would be a better place if intelligent people made more of the concrete products and services that get priced, than if they chased butterflies to expose that price one minute earlier to concentrate ever-more ephemeral, irrelevant arbitrage opportunities into their own little house like a Maxwell's Demon of the stock market.
Of course the whole point for a firm like Jane Street is to make money. To make money means they are competing with someone and that someone could be a loser depending on the scenario.
My own opinion, most folks don’t like market makers or folks who work in financial markets are simply not well informed. The efficient allocation of capital is a valuable service to humans in a capitalist society. People often forget how wide spreads were in the past and that humans were swallowing that margin up with little competition. Now market making is highly competitive and because of it investors both small and large benefit from it.
It's mercenary work, plain and simple. Advanced, interesting, full of juicy maths, highly competitive, rewarding, but mercenary. No one's doing this job for the good of the world, come on.
Give some of your earnings to trans defense NGOs, now that makes a difference and I'll be personally grateful.
As for the “bucketloads of cash,” that’s just how competitive advantage in markets gets priced. If firms didn’t deliver something real, the money would dry up quickly. Markets are brutally efficient at punishing dead weight.
Philanthropy is great, give to causes you care about. But it’s worth recognizing that the system enabling those donations in the first place is the same one that relies on liquidity, efficient spreads, and functioning markets.
All for-profit businesses can be viewed abstractly as “in the business of making money”, so this doesn’t really distinguish Jane Street in any way.
> … why/if what they do is useful to anyone?
The utility that Jane Street provides is to the be a persistent buyer and seller of equities. Basically you can call them at any time and buy shares or sell shares. Most shareholders do not trade very often so without a “market maker” like Jane Street it can be a lot of work finding a buyer/seller who is willing to trade on your schedule at the current market price. You’ll have to pay them extra to convince them to trade, which makes it harder to trade profitably. Jane Street significantly lowers the price and makes trading easier (“provides liquidity to the market”).
In turn that leads to more efficient markets since prices converge to their "correct" value faster.
The societal value of either is debatable all the same, mind you. It's more that wherever you have markets, you have money-making opportunities that can be leveraged, and therefore are.
Sure, Jane Street probably isn’t the fastest in the business, but I wouldn’t be surprised if they’ve got FPGAs or ASICs, dedicated high speed pipes to shave off milliseconds of latency, things like that.
Market makers like JS vastly increase market liquidity across all sectors, which is required for modern high-efficiency economies to work. McDonalds prices are possible because there's enough liquidity in corn futures.
More abstractly, high market liquidity corresponds to higher-confidence information about the future, which hedge funds generate (and distribute for a low fee via markets), allowing for more impressive planning ahead.
Also, you know how when you buy stocks it doesn't cost you anything and you often get better-than-public-book execution prices? That didn't happen prior to modern electronic market makers. Multiply that efficiency gain by umpteen trades every day.
In general, "being in the business of making money" inherently requires you to do something useful to get paid, to the extent you're not just abusing a principle agent problem or something. The most credible argument for hedge funds making money without doing something useful is that they're doing cantillon effect harvesting or something. I think that's pretty small overall.
in my experience Jane Street make no attempt to defend the financial system; such societal benefits are obvious or implicit.
whether you (or they!) really buy that is irrelevant
- Money (the concept) is useful to society as a store of value, so you don't have to waste effort bartering for things.
- Adding on to that, credit is useful to society since it lets humanity even more efficiently allocate its good and labor (stored as money).
- Finally, stocks, insurance, and other financial instruments are additional advanced developments on top of credit, where groups of humans (companies) can take on even more risky endeavors supported by investors or insurers.
So my view is companies like Jane Street facilitate these complicated value transfers, to let (e.g.) a spaceship company draw on resources generated by growing crops, selling shoes, giving haircuts, etc via a convoluted path through stocks, ETFs, whatever.
Are the bright minds at Meta making the world a better place? What about OpenAI? Is the damage AirBnb has done to many communities (and housing stock) useful?
It’s debatable for sure…and hilarious coming from tech folks on this forum. Pretending we’re righteous doctors or something LOL. Give me a break.
For context i’m a software engineer that’s very grateful I don’t work in the ad, retail, or any other “dark pattern” space. But most tech jobs _are_ like that!
I can only imagine what good that brainpower could do for humanity if it weren’t occupied finding cleverer ways to manipulate electronic money.
All I'm saying is that I wish our economic system were set up such that people with the mental aptitude to work at a place like Jane Street could earn commensurate salaries for applying that aptitude towards problems with much greater positive externalities than proprietary trading. Alas, it is not so.
It's another level detached from real value
I think it would be good if our best minds went to work on directly creating better things instead of indirectly moving money around efficiently so that other people might eventually find success.
Capital has to get from savers to builders. Liquidity, tighter spreads, and efficient pricing lower the cost of capital for all projects, including the ones building better solar panels. If financing those projects is cheaper and faster because markets function well, more of them get done.
It’s easy to glorify the visible widget (solar panels) and discount the invisible infrastructure (capital markets), but the latter is what makes scaling the former possible. The system needs both.
In the first case, money is important (if you completely ignore it, you can’t deliver value sustainably), but in a perfect world it should be more like fuel and an indicator that you are doing something right.
Same with farming. “Amortize the cost” only works if margins and credit markets allow it. A small farmer facing price volatility, weather risk, and thin margins doesn’t have the same access to capital markets as a Fortune 500 manufacturer.
The whole point of efficient markets is to reduce those frictions, to better allocate risk and capital so that good projects (whether in manufacturing or farming) don’t just work “in theory.”
For me, no better system exists in the world. It’s not perfect but until there is something that works better I will have the agree with it.
Exactly what I am lamenting in my original comment. Investors chase returns, i.e. money for its sake.
As long as that is conceptually a thing, it is a no-brainer to fund a bad company if you are sure its shares will go up in price during the term of your investment; it is also in your interest (and acceptable within the “money for its own sake” framework) to ensure its shares do go up by helping hype it up; etc.
This all, I believe, is a source of strong and far-reaching negative externalities, which I am far from sure are trumped by its potential benefits.
> A small farmer facing price volatility, weather risk, and thin margins doesn’t have the same access to capital
Why do you need access to capital in order to price in the risks or the cost of relevant insurance? (That’s what I meant by amortising, I might have used a wrong term.)
Why are you “facing thin margins” like it is not an open market where you set your prices and your margin is your choice?
On farming: margins aren’t simply “a choice.” Prices are set in global commodity markets, not by a farmer unilaterally. Thin margins are structural, and access to capital or insurance is exactly what helps them survive volatility rather than get wiped out.
I am not sure why you think farmers get to set price on a commodity item. They don’t and because of that will often leverage future contracts or other hedges to bake in prices early.
I think it’s up to every participant’s discipline and that’s fair enough. If one sets prices in too much, another local farmer will sell more. If another local farmer undercuts on price, they’ll suffer more when times are tough and weather is bad.
> more capital scarcity
If there is a lot of capital knowingly feeding ethically problematic and/or incompetent companies due to an expectation of return (and then ensuring that return by promoting those companies), then less capital is absolutely better.
Regarding the rest of your comment, I’m not as advanced in this subject, so to me you seem to only list more issues with the system as is.
Maybe humanity can start paying them decent money first?
How do we start to care about quality, building lasting things, fundamentals? What would happen if we taxed capital gains at 100% for the first, I don't know, 3 / 6 / 9 months of holding an asset? Maybe investors would have more incentive to care about fundamentals?
Anyway, I assume I'm wrong about all of this, just looking for someone to explain why. ;-)
Which companies? Because the net income and profit margin trends for the most highly valued companies have been the highest in history, for many years now.
At the end of the day I believe that if CS/finance was not "cool" and paid the way it does (specially at the level of HFT) most of those kids currently there would go back to the good old law/medicine...
Companies like JaneStreet, 2Sigma, etc employ some of the best software engineers, mathematicians, physicists and what not just so they can
all so that they can move money around [and do so quickly].Finance is not alone either. A non-trivial amount of big tech is on tracking users and serving ads better.
Do I blame the engineers? No.
I am just lamenting the state of society since this is how we have the brightest among us function and work.
But plenty of people here do work on real products. Planes need software, browsers need security patches, hell even your accounting app is good value over the days of doing that all by hand.
That’s not a moral indictment, just a reminder that most of our jobs (mine included) exist to make capital move faster or stickier. Calling one sector “real products” and another “not benefiting society” is a bit of a convenient fiction.
That's not too cast moral judgement -- just to point out that under a different economic system, these overhead costs could be avoided and these resources (human and otherwise) could thus be redirected to ends more concomitant with human flourishing.
It’s fine to take pride in craftsmanship, just maybe less fine to pretend it’s immune from the same critique applied elsewhere.
I am just blaming society in that it doesn’t seem to prioritise “good” and “useful” things.
I don’t disagree there are certainly things each of us on this planet think is good or useful but in my opinion that’s the problem. How do you get a collective group of different humans to agree what that is. Capitalism with all its faults solves this problem pretty nicely. It’s not perfect but as far as I know it has been the best system so far.
Once you start noticing things changing, try to identify how you could profit off of it. If it's a change, then there's profit to be made somehow.
Any anecdote is a potential lead.
The only "actually useful" tech jobs if we're going to consistently apply a bar that excludes finance would be stuff like aerospace R&D or ERM systems. Which, to be clear, I would love if society incentivized more strongly. But finance is hardly the worst offender here.
https://www.bbc.com/news/articles/c5y0zgrevl1o
Basically, SEBI investigated Jane Street's trading on January 17, 2024, when the firm allegedly made about $86 million in a single day through what regulators term "intra-day index manipulation."
HFT and Ads are two places which (currently) print money, so it vacuums up all the talent, and puts it to use growing their already-huge revenue streams.
Some amount of extremely competent engineers worked on the tech that made it possible to target beauty ads to insecure teen girls when they deleted a selfie.
Some amount of extremely competent engineers where complicit in building the tech that stoked the fire under the Rohingya genocide.
I could go on, but I think you get the point.
1. Watch Stand-Up Maths and Numberphile videos on YouTube and do not skip the sponsor advertisement readings, e.g. https://youtube.com/watch?v=eqyuQZHfNPQ .
1. Read https://news.ycombinator.com/item?id=44480916 .
Part of Jane Street's business is HFT, and software is the "product" of HFT firms, because without extremely low-latency software (and hardware) they cannot make money.
My preference was for both sides to learn at the end of the day.
https://www.cnbc.com/2025/07/04/indian-regulator-bars-us-tra...