Should we worry about high-frequency trading?

Should we worry about high-frequency trading?

Should we worry about high-frequency trading?

As reported from Scott Phillips, ever since the meltdown at the US firm Knight Capital last month, the debate over high-frequency trading has exploded.

In short form, high-frequency trading is a flavour of trading that leverages computers and the speed of super-fast data connections to make lightning-quick trades, and lots of them. This means that, often, the trader’s servers are situated in the same data centre as the exchange’s servers.

While there’s no single strategy of a high-frequency trader – they might be acting like a market-maker, or playing index arbitrageur – the common thread is that they all rely on speed to succeed.

So, the billion-dollar question is: is this type of trading a major risk for markets, or closer to a non-factor?

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About yocijourney

God does not play dice
This entry was posted in Finance, High Frequency Trading, Insider Trading, Market Making, Regulatory Updates, SEC, World Economy and tagged , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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