Commentary

Brian Decker
Traders Magazine Online News

Three Reasons the "Downs" Have Greater Impact In An "Up and Down" Stock Market

Brian Decker, a financial planner and founder of Decker Retirement Planning Inc., argues that it is much more important for investors to consider the downside in turbulent markets than the upside.

Traders Poll

Is the adoption of electronic trading in fixed income on par of that in the FX sector?




Free Site Registration

November 1, 2013

Braking HFT

By

Peter Chapman

Should one group of traders have a speed advantage over another? Many in the industry say 'no' as they blame high-frequency traders for the market's ills. At least one academic agrees and has a plan to put the brakes on.

Eric Budish, an associate professor of economics at the University of Chicago, told attendees at a recent industry conference that high-frequency trading drives up costs for investors by harming market makers. He believes a wholesale makeover of the market's structure from continuous trading to a series of call auctions would give bona fide liquidity providers time to react to the predatory behavior of high-frequency traders.

"A news event can lead to a race amongst high-frequency traders to pick off liquidity providers' stale quotes," he said at Baruch College's annual Financial Markets Conference. "That race manifests itself in an increased cost of liquidity provision. I think we have the wrong market rules in place. My research suggests we should move from a continuous-time market to one of discrete time. Perhaps once per second or once per 100 milliseconds."

 

(c) 2013 Traders Magazine and SourceMedia, Inc. All Rights Reserved. 
http://www.tradersmagazine.com http://www.sourcemedia.com/