Didn't they crack down mostly on HFT? I haven't heard of a huge crackdown on low/medium frequency quants, and LLM research has low crossover with high freq. quant stuff
Trading within a few seconds is not really considered HFT, it's mid-freq nowadays. High frequency is in microseconds end to end nowadays.
High-Flyer says it took directional bets and held positions, which makes at least part of it not HFT.
Also, I doubt that most quant money is in market making nowadays. That was true at some point and that's true of HFT, but I doubt it is of quant trading in general anymore.
Besides, High Flyer certainly isn't a market maker, or they wouldn't be a hedge fund. You can't really be both, hence with Citadel and Citadel Securities (Market Maker) are so strictly divided.
