Archive for the ‘HFT’ Category

High-Frequency Trading Losing Frequency

Monday, October 5th, 2015

The publication of Michael Lewis’ book Flash Boys early in 2014 brought high-frequency trading (HFT) to the attention of many investors for the first time.

Lewis was quoted on “60 Minutes” saying that HFT rigs the stock market against the small investor. Media made it known that the FBI – the folks who investigate drug dealers and organized crime – was investigating HFT.

Wenning Advice had posted frequently about the practice as early as 2011, warning about the distortion that high-frequency trading causes to market fundamentals, the predatory nature of high-frequency trading, the inequity of high-frequency trading, and the risk that high-frequency trading creates for all of us.  We even pointed out that “Satan is a high-frequency trader.”

Michael Lewis

Michael Lewis

 

But what’s happened to HFT since 2014?  And what happened to the FBI’s investigation of the practice?

HFT has not gone away. But it’s not what it used to be.

We noted in 2011 that HFT accounted for 73% of all equity trading in the U.S., up from 30% four years earlier, based on research from TABB Group.

Rosenblatt Securities estimated that HFT trading volume fell from about 3.25 billion shares a day in 2009 to 1.6 billion shares in 2012. And TABB Group estimated that HFT revenues from U.S. equity trading declined from about $7.2 billion in 2009 to $1.3 billion in 2014.  (more…)