At a hearing this week held by the Senate Banking Committee on electronic trading and equity market structure, top industry veterans were quick to point out that vilifying one style of trading will not help our markets. In fact, they said, removing it from the markets would be detrimental. Rather, we should examine our current market structure and make necessary changes.
As an article in MarketWatch notes:
“Ban high-frequency trading, anyone? No thanks.
“That was the response Tuesday from witnesses at a Senate Banking Committee hearing to a question from Nebraska Republican Sen. Mike Johanns. The committee held a hearing on electronic trading and market structure, and while controversial, high-frequency trading was defended by three executives and one academic with industry ties.
“’Absolutely not!;’ said Kenneth Griffin, founder and chief executive of Citadel LLC, a financial firm that engages in high-frequency trading, in response to Johann’s question. Kevin Cronin, global head of trading at asset manager Invesco Ltd., IVZ +0.82% agreed, and also told senators high-frequency trading is “not bad” in and of itself. Jeffrey Sprecher, the CEO of Intercontinental Exchange Inc. ICE +0.04% , which owns the New York Stock Exchange and other markets, as well as Georgetown University Prof. James Angel, who sits on the board of DirectEdge, another stock-exchange operator, agreed the practice shouldn’t be banned.
“But while executives said they didn’t want to ban the trading practice, they did call for changes in market rules. Cronin, for example, called for requiring all high-frequency trading participants to register with regulators. That would give regulators access to records needed for investigations. Sprecher, meanwhile, said markets are too complex and that deters some investors from accessing the public markets.”
Read the entire article on MarketWatch.com here.