HFT is irrelevant, those firms basically compete with themselves and there's really not all that much money in it anyway. They're just providing liquidity and can basically be ignored 99% of the time.
You realise there are proprietary trading firms with algorithms making billions of $ every year just trading stocks at high frequency, right?
If anything they actively avoid trading against themselves and seek out opportunities in markets where retail investment is still at high participation.
Yes, they make a few billion between them in an ultra-competitive, expensive to compete in environment. My wording wasn't the best, but what I meant is that HFT firms only compete with other HFT firms. They're basically all battling to offer the cheapest service possible to other market participants, and can offer even better prices to retail due to the non-toxicity of the flow.
Virtu has a market cap of what, 6bn? Citadel was valued at 22bn from the recent funding round. Those are the biggest players in the space, and it's becoming increasingly monopolised. Meanwhile JP Morgan has a market cap of 450bn, BlackRock a market cap of 110bn, and BlueCrest manages 40bn of its own money. Considering how much attention it gets, HFT is pretty innocuous. The notororiety is basically because they pay 23 year olds 400k/year and it sounds scary to outsiders.
Most prop trading firms arent public. Rentec have something like $150bn under management and are making 20-40%/yr return. If they had a public "market cap", they'd be huge
Medallion makes those returns and is capped at 10bn. The rest is more traditional fund management (and performance isn’t great).
Also from what I understand Medallion is HFT in one sense (fast trading with short hold times) but not to the point proper firms are where being fastest is necessary for edge.
