Goldman Sachs is spending $100M to shave milliseconds off stock trades
...actually it doesn&#x27;t sound to me like this article is about HFT-based prop trading at all (prop trading would mean Goldman Sachs taking positions onto their own books), but about the business unit called GSAT (Goldman Sachs algorithmic trading) who execute trades on behalf of clients, so never taking any positions onto their own books.<p>The traditional market model used to be that at every point in time, a market maker would offer a price to buy&#x2F;sell at.  The bid would, of course, be lower than the ask, the difference being called the spread.  When a pension fund wanted to execute a trade, they would have had to cross the spread, and, statistically speaking, half the spread would immediately accrue to the market maker as profit.  ..so this is money that YOU, the holder of a pension, are losing, and that THEY, the rich folks acting as market makers that the public likes to get mad at, are taking away from you.<p>The business model of GSAT is that a pension fund can ask Goldman Sachs to use algorithms to do things on their behalf that are less naive than what I just described above and end up giving less money to the market maker.  For example, GSAT can become a market maker on your behalf, but make a market on only one side, i.e. only offer a price to buy at or only offer a price to sell at, with the resulting trades being executed on your behalf, so it is now you who makes money off those trades, in the same way as it would traditionally be a market maker&#x27;s privilege to do.<p>The public loves to get mad at Wall Street.  But they should please get their facts straight about who the good guys are and who the bad guys are.