Commentary

Tim Quast
Traders Magazine Online News

We're All HFTs Now

In this guest commentary, author Tim Quast looks back at the history of HFT and how the market has evolved to where many firms now fit the definition of high-frequency trader.

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March 23, 2005

Is Free Riding Good for Markets?

By Gregory Bresiger

Free riding can sometimes be helpful. That's the contention of pension fund TIAA-CREF Investment Management, which argues against the trade-through rule, in a report to the Securities and Exchange Commission. TIAA-CREF agrees that the NYSE plays a dominant role in price discovery, but nevertheless argues that "an ATS such as Liquidnet, ITG's POSIT, or any upstairs market maker can play a major role with regard to quantity discovery."

An ATS's quantity discovery role can have a positive effect on price discovery, according to the report by TIAA-CREF managing director Paul Davis, and professor Robert Schwartz.