The MMI wanted to make sure you have seen the latest commentary from Bart Chilton in the New York Times’ DealBook, entitled “No Need to Demonize High-Frequency Trading.”
According to Chilton, a former CFTC commissioner, “the real lesson of the recent attention to such [high-frequency] trading, is this: technology in modern markets is here, will not disappear and is providing significant benefits to institutional and retail investors.”
Like any other kind of market participants, we should keep our minds open to both the positives and negatives of high-frequency trading, argues Chilton: “For example, even though the New York attorney general’s complaint and the general public conversation use demonizing words like ‘predatory’ and ‘toxic’ to describe high-frequency trading, study after study has proved that modern markets are cheaper and safer than ever before.”
Supporting the efforts of SEC Chairwoman White to begin data-driven reviews of U.S. market structure, Chilton explains that while certain aspects of the HFT industry do need possible oversight, we must preserve the many benefits electronic trading has brought to end investors and the marketplace:
“We want the benefits of high-frequency traders and their technology, but we need to make sure the technology is being deployed safely and responsibly because everyone has a stake in the outcome.
“… Fortunately, there is an emerging view among some in the world of high-frequency trading that in addition to a fulsome discussion about the benefits of such trading, we should require more advanced regulation.”
Read Chilton’s entire commentary here.