CME Group Study Says High-Frequency Traders Mute Price Swings

As reported by NASDAQ’s Jacob Bunge, a senior executive of CME Group Inc. (CME) said Tuesday that a lengthy study of the futures exchange company’s markets showed no evidence that high-frequency traders drive up volatility or increase costs for investors.

An evaluation of trading over a two-year period in CME’s commodity, interest- rate and stock-index derivatives markets found that as algorithm-driven firms did more business, prices became less turbulent and liquidity improved, according to Bryan Durkin, chief operating officer of CME.

“There is considerable evidence that high-frequency traders increase liquidity, narrow spreads and enhance the efficiency of markets,” said Durkin.

The world’s largest futures exchange operator is rebutting assertions that computer-driven trading firms–which represent its biggest customer group–are behind spikes in volatility and disadvantage slower-moving investors. Brokers have eyed sudden price swings, most recently in commodity markets like crude oil, looking for evidence that high-frequency trading firms are behind the moves.

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