Treat The Disease, Not The Symptoms

13

May, 2011

Traders Magazine has a cover story this month titled “Defending the Turf: Sellside Moves to Protect Buyside From HFT Onslaught” Read Traders Magazine article here.  Before the author of the article gets into his story about how sellside brokers are trying to adjust their algorithms to deal with the predatory practices of high frequency trading, he makes this statement: “The more common HFT trading strategies involve market making or some form of arbitrage. These strategies are considered beneficial for the market as a whole, as they supply liquidity and keep prices close to fair value.”  And we were hoping for a well-balanced article and the first thing we read is about how HFT supplies liquidity.  Too bad the author doesn’t also state that HFT demands even more liquidity than they supply. Maybe we will send him a copy of the May 6^th SEC report.

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