We could probably keep going round and round saying &quot;no that&#x27;s not how it works&quot; and appeal to our technical expertise in the area in question, but instead lets argue it from first principals.<p>On the one hand we have an ultra fast HFT that is just sitting there trying to do only latency arbitrage between 2 venues.  On the other we have an ultra fast HFT that is making markets on multiple venues.  For the first HFT the upside to their strategy is that they can hold very little inventory.  Of course they are not going to be able to buy orders that are <i>already</i> at the correct price.  That is, orders that could have been put in place seconds, minutes, days or weeks earlier are going to have time priority regardless of how fast the pure latency arb player is.  They are also going to be wrong some percentage of the time.  Meaning they are going to have inventory they need to unload and all that entails.<p>Meanwhile the market making HFT has more inventory risk, but they also get some of the latency arb for free, as they are <i>already</i> at those positions.  They get some of the latency arb the same way the pure arb player does (ie they are super fast as well) and when they are wrong or lose the race they also have sophisticated inventory management processes in place that they amortize across all of their strategies and not just the latency arb ones.<p>It turns out that the second model is more profitable, and that is very very important when you are investing in super low latent bespoke networks as part of your operational model.