Beware the Alpha Sharks! High Frequency Trading and Its Impact on Markets

 

Beware the Alpha Sharks! High Frequency Trading and Its Impact on Markets

Maureen O’Hara, professor of finance at Cornell University, and member of the Systemic Risk Councilhas a warning to traditional investment managers, i.e., low frequency traders (LFT): High frequency trading(HFT) is now the norm, and it is not going away. Continuing to pretend that HFT has no effect on your investments and on your alpha is at best naïve and at worst ignorant. Need proof?

New Laws, Including Breaking the Speed of Light

Both the Chicago Mercantile Exchange and NASDAQ are building a new faster link between their data centers in Chicago and New Jersey to “beat” the speed of light. Wait, I thought the speed of light was a universal maximum? It is, but you see by constructing two 60-foot towers the additional height travels a shorter distance than if the connection were at ground level due to the curvature of the earth. Doing this earns each transaction a faster execution time of — wait for it — 4 milliseconds!

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