I understand there is an awful lot of Quantitative Math required for statistical arbitrage/algorithmic trading. However, would someone "in the know" be able to tell me whether there is less quantitative requirement for being a market-maker?
My (simplistic) viewpoint on market making is you simply want to keep quoting, collect the exchange rebates and if you get hit on one side of the bidask spread you need to hedge that trade. Using this (admitedly simplistic) viewpoint, I got the impression there was far less PhD-level mathematics involved than stat arb/algo trading?
I ask because myself and a group of friends are low-latency programmers and we are pondering whether we could realistically start up a small market-making business and utilise our low-latency experience. However, with our speciality on the technical side and no PhD mathematicians, we weren't sure how plausible it was.
Assuming it was plausible would you suggest beginning with a smaller exchange/market? Straight equities vs index futures/options, does it matter?
Any useful advice would be most welcome.