Britain's Treasury recently commissioned a study on the effect of high-frequency traders on markets.
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High-frequency traders argue they've lowered trading costs for consumers and made markets more efficient.
We saw that in 1987, too, even though high-frequency traders were not yet on the scene.
They can start by making markets coordinate and making high-frequency traders maintain orderly markets.
That made it harder for specialists to compete with other traders, most especially high-frequency traders.
Senator Kaufman and others have been advocating for more information about these high-frequency traders.
Many of the high-frequency traders have their machines in locked cages, for fear that someone might snoop.
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Their chief economist, Andrei Kirilenko, maintains that high-frequency traders are profiting at the expense of smaller traders.
Over the past two years, however, high-frequency traders become an increasingly controversial, often dominating trading and reshaping markets.
An order can bounce around various venues as high-frequency traders move liquidity around.
Many believe that last year's extreme market volatility was heightened by high-frequency traders.
Manoj Narang of Tradeworx, argued that high-frequency traders create liquidity and hold less capital than a mid-size hedge fund.
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In my interview with Senator Kaufman in January, he noted that no one seems to know much about high-frequency traders.
So who are these high-frequency traders that some call nefarious and others consider them to be the next market makers?
The strategy also has come under heightened scrutiny amid concerns that some high-frequency traders were gaining unfair advantages in the market.
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That raised public awareness of the risks related to the emergence of high-frequency traders as a major force in financial markets.
The SEC is proposing a ban on flash trading along with other issues grabbing headlines, like direct market access for high-frequency traders.
But some of the advantages that accrue to high-frequency traders look unfair.
High-frequency traders create liquidity and lower costs, which is good for investors.
Others are demanding an end to some favorite practices of high-frequency traders, like offering bids for shares that last only a few milliseconds.
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The problem, Mr. Lauer says, is that ETF firms at times give high-frequency traders access to the inner mechanics of how the ETFs operate.
People are already dissecting the report and tearing it apart, some speculating that high-frequency traders manipulating the market are really to blame.
They feel at the mercy of high-frequency traders and big brokerages.
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Hyperactive speculators, particularly high-frequency traders that use digital techniques to simulate the front running that used to go on in the pits, would probably complain loudly.
He says many ETF firms court high-frequency traders, which help provide the buy and sell orders that can make ETFs easier to trade for other investors.
Regarding market fragmentation, Sauter noted that this can be both a good thing and a bad thing but that high-frequency traders bring the markets back together.
Senator Ted Kaufman (D-Del.) pointed out in a recent letter to the Securities and Exchange Commission that he would like high-frequency traders to take on more obligations.
In an Op-Ed for Bloomberg News, she went to great pains to make a clear-eyed case that our financial markets are being hijacked by high-frequency traders.
These were the direct ancestors of the "co-location" and "direct data feeds" that have enabled high-frequency traders to get first crack at market prices on today's stock exchanges.
There he witnessed several watershed moments in trading, including the decimalization of the exchanges, the splintering of the Nasdaq-NYSE duopoly and the rising role played by high-frequency traders across global markets.
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