Matt Levine’s Money Stuff: High-Speed Traders Slow Down

Tower

There is a rough conceptual distinction between a “hedge fund” and a “proprietary trading firm.” The way it goes, approximately, is:

• A hedge fund manages money for outside investors and takes a cut of the profits for itself. A prop firm manages only its own partners’ money.
• A hedge fund is on the buy side; it makes investing decisions. It buys stocks that it thinks will go up. A prop firm is often more of a market maker, a liquidity provider: It tries to buy from people who want to sell, sell to people who want to ...