A market maker quoting both sides earns the spread on the trades it wants and loses considerably more on the ones it does not. The difference is adverse selection: the fills that arrive immediately before the price moves against you. This is why raw speed, on its own, is a poor description of what a passive strategy is optimising. The relevant questions are where the quote sits in the queue, how quickly it can be withdrawn when the picture changes, and what a fill actually tells you.
Queue position is economic, not cosmetic. On a price-time priority book, an order resting near the front is filled early in the queue’s life, often against uninformed flow; an order joining at the back is filled last, which frequently means it is filled precisely when the level is being cleared by someone who knows something. Two identical quotes at the same price can therefore have very different expected outcomes, and a fill rate reported without queue context tells you almost nothing about whether the book is healthy.
That reframes the latency requirement. What matters is not only how fast a quote can be placed, but how reliably it can be pulled — and reliability is about the variance of the response time rather than its average. A system with an excellent median and an occasional multi-millisecond excursion will be filled during exactly those excursions, because that is when the market is moving and everyone else is cancelling. Determinism is worth more than a marginally better mean.
Messaging discipline is the constraint that surfaces next. Exchanges price and limit order-to-trade ratios, and a strategy that reprices continuously will spend its budget on quotes that were never going to be hit. Fewer, better-reasoned repricings — driven by a change in the fair value estimate rather than by every tick in the book — usually improve both the ratio and the fill quality, because they leave the quote in the queue long enough to earn its position.
Inventory ties it together. A book that accumulates a one-sided position after a run of adverse fills has stopped market making and started taking a directional view it never decided to take. Skewing quotes against inventory, and sizing that skew against the volatility of the instrument, is what keeps the strategy inside its mandate. The firms that do this well are rarely the fastest in the room. They are the ones that know which of their fills they should not have wanted.
