HFT Is A-OK, Industry Says
Traders Magazine, June 2010
In its Concept Release, dated Jan. 13, the Securities and Exchange Commission asked the industry and the general public for their views on the activities of high-frequency traders. The commission wondered whether HFT practices might be bad for the marketplace and require regulation.
Most respondents--but not all--said "no."
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There is a market misperception that this investor type is predatory, and operates by manipulating the markets or by seeking to game other orders. We believe this is a sweeping mischaracterization of the vast majority of short-term traders.
--John Ingrilli, chief operating officer, UBS Equities, Americas
The liquidity they provide is beneficial to the markets.
--David Cushing, director of global equity trading, Wellington Management Company
As high-frequency traders have hijacked the equity markets and become the casino (i.e., "the house"), they have become nearly impossible for long-term investors to avoid. Investors must either engage HFTs and pay a "tax" or risk never allocating their capital to worthy enterprises.
--Deborah Craddock, head of trading, et al., Southeastern Asset Management
Each participant should be judged on their behavior, not their business model.
--Peter Kovac, chief operating officer, EWT LLC
High-frequency trading is the first to flee the market in times of stress and volatility. They can simply turn their programs off for the rest of the day. [NYSE]-designated market makers have an obligation to the marketplace and do not stop trading just because it enters a short period of unprofitability.
--Patrick Armstrong and Daniel Tandy, co-presidents, Alliance of Floor Brokers
HFTs are the liquidity backbone of the market.
--Manoj Narang, chief executive, Tradeworx
Legitimate conduct should not suffer disparate regulatory treatment based on whether such conduct is "high-frequency" or "low-frequency."
--Eric Hess, general counsel, Direct Edge Holdings
Speed is not inherently unfair or harmful; it is the misuse or misapplication of speed that may harm investors or markets.
--Joan Conley, corporate secretary, Nasdaq OMX Group
The term "high-frequency trading" is ill-defined, referring to a broad range of strategies and activities. Thus, the commission should avoid generalizing the concerns raised by certain questionable strategies to all electronic traders.
--John McCarthy, general counsel, GETCO
High-frequency traders and their strategies are under scrutiny for the very benefits to which they have directly contributed-the ability to recognize immediate price discrepancies and equalize pricing of securities.
--Greg O'Connor, compliance manager, Wolverine Trading
If long-term investors are the gasoline that fuels the U.S. market's economic engine, then short-term investors are the oil that ensures the engine runs smoothly and efficiently.
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