Sep 5, 2012

Thomas Peterffy NPR Interview

Thomas Peterffy - founded and chairman of Interactive Brokers recently gave a short interview on NPR (here is a partial transcript and 5 minute condensed interview, here is complete 26-minute podcast) . My first job after college was at IB over 10 years ago, and I have all the respect for him. However I find his commentary about "no social value" to be tendentious - high frequency trading probably has as much social value as reselling Juicy Fruit gum. And Peterffy himself certainly would not be able to become such a success living under social regime.

Peterffy and his firm Timber Hill (market-making branch of IBG) were real pioneers of trading, who in the 70s, 80s, 90s, and most of 00s were years ahead of competition. Exchanges and other options firms were engaging in all kings of anti-competitive tactics trying to slow down Timber Hill - the typing robot is just one of many stories like that. But now that Timber Hill is not a leader in speed (and Timber Hill profits have been in decline)  does it really make sense to start complaining about social value?

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