High-Speed Traders Profit at Expense of Ordinary Investors, a Study by Chief Economist at the Commodity Futures Trading Commission, Andrei Kirilenko, Says

Economist Andrei Kirilenko (Mendoza College of Business)

A top government economist has concluded that the high-frequency traders that have come to dominate the nation’s financial markets are taking significant profits from traditional investors.

The chief economist at the Commodity Futures Trading Commission, Andrei Kirilenko, reports in a coming study that high-frequency traders make an average profit of as much as $5.05 each time they go up against small traders buying and selling one of the most widely used financial contracts.

The agency has not endorsed Mr. Kirilenko’s findings, which are still being reviewed by peers, and they are already encountering some resistance from academics. But Bart Chilton, one of five C.F.T.C. commissioners, said on Monday that “what the study shows is that high-frequency traders are really the new middleman in exchange trading, and they’re taking some of the cream off the top.”

Mr. Kirilenko’s work stands in contrast to several statements from government officials who have expressed uncertainty about whether high-frequency traders are earning profits at the expense of ordinary investors.

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