12 February 2016

HFT is harmful, say US market participants

24 April 2014  |  3817 views  |  0 NYSE 1

More than two thirds of US financial industry participants think that the equity markets are not fair and half consider high-frequency trading harmful, according to a survey from ConvergEx Group.

With a debate currently raging about the US market in general, and HFT in particular, in the wake of the publication of Michael Lewis's Flash Boys, ConvergEx polled 357 industry participants, mostly from the buy-side.

Just 18% of respondents say that the equity markets are fair to all, compared to 70% how say that they are not and 11% who do not know.

More than a third think that, overall, HFT is harmful to market participants and 13% think that it is very harmful. Just 19% think HFT is either helpful or very helpful, while 30% think that it is neutral. Nearly a quarter of those polled say that the recent debate on HFT has actually changed the way that they interact with the equity markets.

Meanwhile, 43% want more market structure regulation, compared to 19% who want less and 38% who think that the balance is currently correct.

Lewis has claimed that the US stock market is rigged, comparing large investors to tourists led to a casino where the card games are fixed. Charles Schwab's eponymous chairman has also waded into the debate, decrying HFT as a "growing cancer" that needs to be excised.

The FBI is now looking into the practice while New York attorney general Eric Schneiderman has been on a crusade against the practice as part of an 'insider trading 2.0' campaign. In Europe, MEPs have recently voted through new rules designed to clamp down on the 'Flash Boys'.

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