Reporter David Walker wrote that the global head of equities trading at Invesco, which has more than half a trillion US dollars invested in shares, has questioned the utility of high frequency trading, and said this practice and the fragmentation of liquidity pools has fundamentally changed the game for longer term investors.
As a longer term investor, Invesco and its more patient peers are increasingly surrounded
by quick-fire traders sometimes micro-second transactions are responsible for up to 70% of daily market volume.
The phenomenon has drawn fire from regulators who are investigating its utility, and whether it is responsible for some sharp market falls since the 2008/2009 crisis.
The equities team at Invesco is constantly re-evaluating and retrospectively assessing the efficacy of its trading strategies, and its ability not to flag trading intentions to competitors, he says.
An increasing number of these are the machines at high frequency traders, aiming to predict and exploit others’ trading patterns.