Institutional investors troubled by HFT - survey

Institutional investors troubled by HFT - survey

More than two thirds of institutional traders around the world are concerned about the impact of high-frequency trading (HFT) on the equities market, according to a survey from Liquidnet.

High-speed electronic trading has become increasingly dominant in recent years, with nearly three quarters of overall daily equities trading attributed to HFT by some research houses.

Authorities on both sides of the Atlantic are exploring measures to regulate the still-young practise, spurred by last May's 'flash crash' which saw a dizzying plunge in the Dow Jones Industrial Average.

Liquidnet, which operates marketplaces for institutional investors, says a poll of over 300 of its customers around the world shows considerable consternation about the effect HFT has on the market.

In North America two-thirds identify themselves as concerned about the practice, 60% of European respondents are worried, while in Asia Pacific, where HFT is less prevalent, it is just over half.

Broadly, global traders are significantly more concerned than those who only trade in their regions. At the top five global institutions, 73% of the traders say they regarded HFT as a high-priority market-structure issue.

Seth Merrin, CEO, Liquidnet, says: "Investors are clearly concerned that their long-term investment styles are at odds with the speculative, nano-second profit taking approach utilised by high frequency traders."

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