medium · Market Microstructure mmf-core

Which statement best captures why the FBA changes the nature of the resulting competition among fast traders?

1. The FBA converts the race to be first into a uniform-price auction, so liquidity-taking snipers compete on price rather than speed and the stale-quote rent is largely competed away.
2. The FBA eliminates latency arbitrage entirely, because every order submitted within a given batch interval arrives and clears simultaneously, so no timing-based information asymmetry can exist.
3. The FBA shifts the advantage decisively toward liquidity providers, because batching lets them cancel their stale quotes before any fast taker can act within the clearing interval.
4. The FBA increases adverse selection borne by liquidity providers, because batching delays their ability to update stale quotes while fast takers still act continuously.

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