High-Frequency Trading Phenomenon That is Transforming the Investing World, explained in detail the role high-frequency trading has been playing in the equity markets to CNBC Cash Flow’s Oriel Morrison; the interview is available on CNBC’s website at http://video.cnbc.com/gallery/?video=2023403523. High-frequency trading, in which computers may buy and sell thousands of shares in fractions of a second, had come under criticism after the Dow Jones Industrial Average lost almost 1,000 points intraday on May 6, 2010, before recovering just as quickly.
Mr. Perez described high-frequency trading as the natural progression of technology applied to the investing and trading worlds. In the process, high-frequency trading has certainly unmasked structural issues in the U.S. equity markets that are currently being examined by legislators and regulators in an effort to further strengthen financial markets. He indicated that, on balance, the impact of high-frequency trading is positive for all other market participants thanks to the increased liquidity it provides to retail and institutional investors.