High frequency trading to carry on, says Nasdaq
US REGULATORS are unlikely to put rules in place that would harm high-frequency trading (HFT) as doing so would make trading more difficult and expensive for all investors, Robert Greifeld, chief executive officer of Nasdaq OMX Group said yesterday.
HFT is a practice carried out by many hedge funds, banks and proprietary firms using sophisticated computer programs to send high volumes of orders at near light speed, executing short-term trades to make markets or capitalise on price imbalances.
HFT makes up more than half of all US trading volume.
Last week, New York state’s attorney general Eric Schneiderman said in a speech that US stock exchanges and alternative trading platforms provide HFT firms with unfair technological advantages that give them early access to key data, rocking Nasdaq’s shares.
HFT firms pay to locate their computer servers within the data centers of exchanges, and for extra network bandwidth and high-speed switches that give them pricing, volume and order information ahead of others as they race to take the other side of profitable trades, which they then quickly trade out of.