Dwarkesh Podcast Brett Harrison - FTX US Former President & HFT Veteran Speaks Out
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Mar 13, 2023 Brett Harrison, the former President of FTX US and founder of Architect, offers fascinating insights into his tumultuous experience at FTX. He discusses the mismanagement by Sam Bankman-Fried and his inner circle, revealing the challenges and dysfunction that led to the company's downfall. Harrison also shares his perspective on the financial system shaped by high-frequency trading and emphasizes the need for transparency and regulation in crypto. Finally, he highlights his new venture, Architect, aimed at simplifying crypto trading.
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Passive Investing: Pros and Cons
- Passive investing benefits individuals by offering diversified, low-cost market access through ETFs.
- However, it can increase correlation between assets, potentially impacting market dynamics and price discovery.
The Value of HFT
- High-frequency trading (HFT) firms compete to incorporate market signals faster, leading to tighter spreads and efficient markets.
- While seemingly minuscule, these marginal improvements subsidized by the market can have broader technological benefits.
Jane Street's Hiring Challenges
- Early Jane Street hires from Harvard were surprisingly underqualified, highlighting adverse selection in inefficient markets.
- Building a strong brand and culture improved the quality of applicants, demonstrating positive selection.