High-Frequency Traders Growing In Influence

Sandro Contenta of the Toronto Star writes this morning that high-frequency traders aren’t getting much respect these days.

They’re the hedge funds and financial institutions trading big quantities on the TSX and other exchanges, literally at the blink of an eye. Their clout has significantly grown since 2007, when they entered Canadian markets. But their fan base has not, particularly since May 6, 2010, when the super-fast computer algorithms used by high-frequency traders (HFTs) were blamed for a “flash crash” in North American markets.

Almost 200 key market players were asked in Toronto yesterday whether these super-fast traders had a positive impact on financial markets. About a dozen people raised their hands in approval.

The general impression is, “There’s these big, bad HFTs out there,” market consultant Chris Sparrow told a conference on the future of Canada’s equity markets, organized by the Ontario Securities Commission and the Investment Industry Regulatory Organization of Canada (IIROC).

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