Why Is Instant Finality Critical for High-Frequency Trading of Financial Derivatives?

Instant finality is critical for HFT because trades must be executed and settled almost instantaneously to capitalize on fleeting price differences (arbitrage). Without instant finality, there is a time gap where a trade could be reversed or invalidated, introducing high counterparty and settlement risk.

This lack of certainty would make the rapid, automated strategies of HFT unviable, as the execution price could change before the transaction is definitively confirmed.