High Frequency Trading: Clear and Present Danger?

According to Fox Business’s Adam Shapiro, which sounds more risky: driving a race car 200 miles per hour on the Massachusetts Turnpike, or trying to trade stocks from your home computer while competing against high frequency trading (HFT) — the kind of trading performed by sophisticated trading firms every day — which is known to execute trades within one millionth of a second?

Congressman Ed Markey (D-MA) says it’s HFT — and he wants the SEC to slow it down, if not stop it altogether.

While the Massachusetts Turnpike can indeed be scary, drivers still use it (and some even speed). But Markey says HFT is driving investors off the electronic trading highway completely because HFT is eroding confidence in U.S. markets.

In a recent letter the Congressman sent the SEC Markey wrote, “…sophisticated trading firms can make full use of light speed HFT algorithms, while the ordinary investor day-trading his 401k remains at more terrestrial speeds…There is a real risk that algorithmic trading is making investors hesitant to re-enter the equity markets because they fear that the entire game is rigged.”

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1 Response to High Frequency Trading: Clear and Present Danger?

  1. Pingback: High Frequency Trading: Clear and Present Danger?

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