Monday, June 23, 2014

High-Frequency Trade-Off

An HFT trader named Cunningham
Remarked on the skeptics confron'ing 'im:
"The spreads I've compressed
Make it cheap to invest,
So it's okay that I am front-running 'em."

The issue of high-frequency trading won't go away, and positions are hardening like the western front in the 1st World War. On the one side are journalists and many investment managers who say that these ultra-fast trades simply skim income off the top of the market; on the other, HFT firms and other market participants who say that such lightning-fast activity is benign and makes markets cheaper and more liquid. Sure, says the first group; HFTs supply all the liquidity you want until you actually need it. 

In the latest salvo, The New York Times and the Guardian's Heidi Moore editorialized yesterday that HFTs have rigged the market, as the exchanges and policy makers have allowed them to do over the last several years. This provoked a furious counterattack, adding a number of industry participants to Ms. Moore's already-formidable list of blocked Twitterers. 

Meanwhile, the US Senate has held inconclusive hearings on the issue, evidently deciding to leave it to the SEC.  The Commission, for its part, is looking into the issue but playing its cards close to the vest. One can only hope that the commissioners keep investor protection uppermost in their minds, even if the harm to investors from HFT is not blindingly obvious. 

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2 comments:

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  2. High-recurrence exchanging (HFT) is a sort of algorithmic exchanging portrayed by high speeds, high turnover rates, and high request to-exchange proportions that influences high-recurrence monetary data and electronic exchanging tools. While there is no single meaning of HFT, among its key properties are exceptionally modern calculations, particular request sorts, co-area, transient venture skylines, and high cancelation rates of orders. HFT can be seen as an essential type of algorithmic exchanging finance. Specifically, it is the utilization of advanced mechanical apparatuses and PC calculations to quickly exchange securities

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