Comments on: High-frequency trading: Concerns of adverse impact appear overblown http://www.hedgeworld.com/blog/?p=4241 A look behind the hedge fund curtain Tue, 21 May 2013 03:12:41 +0000 http://wordpress.org/?v=2.6 By: Irene Aldridge http://www.hedgeworld.com/blog/?p=4241#comment-43838 Irene Aldridge Mon, 13 Feb 2012 22:49:54 +0000 http://www.hedgeworld.com/blog/?p=4241#comment-43838 Francis, Thank you for positive feedback. I have to disagree with you re: the premise of your argument. Your statement "Since it is obvious that the playing field is no longer level for all the players..." is not obvious to me at all. Instead, I firmly believe that the playing field now is much more leveled than it has ever been: - Transaction costs have declined exponentially, so that now even retail traders can execute trades for less than a dollar a trade down from more than $100/trade some 15 years ago. (Obviously, some brokers still charging $10+ dollars a trade would like to conveniently ignore this little factoid.) - Everyone who has any interest in high-frequency data has access to it. Furthermore, your next statement appears to be emotional and without scientific merit (I am referring to "being perpetually defensive and perpetually watching the offensive High Frequency Actors’ perpetually dominating the electronic playing field".) As a PhD Candidate, you are certainly aware that some 10 studies written in the past year count multiple benefits high-frequency traders bring to the markets. It's not at all clear where your information on "perpetually" this or that comes from. I suspect it comes from watching too much television! In certain cases, however, (and far from "perpetually" as you claim), there are circumstances that may allow high-frequency pump-and-dump. You are correct that in these particular situations, low-frequency traders may find themselves at a disadvantage. These situations are precisely the reason why we launched the new software suite designed to help traders large and small to anticipate such situations and to avoid trading with potentially unscrupulous market participants. If you are interested in learning more about the software, please feel free to contact me at +1 646-233-3513. Hope this helps. Best Regards. Francis,
Thank you for positive feedback.

I have to disagree with you re: the premise of your argument.
Your statement “Since it is obvious that the playing field is no longer level for all the players…” is not obvious to me at all.

Instead, I firmly believe that the playing field now is much more leveled than it has ever been:
- Transaction costs have declined exponentially, so that now even retail traders can execute trades for less than a dollar a trade down from more than $100/trade some 15 years ago. (Obviously, some brokers still charging $10+ dollars a trade would like to conveniently ignore this little factoid.)
- Everyone who has any interest in high-frequency data has access to it.

Furthermore, your next statement appears to be emotional and without scientific merit (I am referring to “being perpetually defensive and perpetually watching the offensive High Frequency Actors’ perpetually dominating the electronic playing field”.) As a PhD Candidate, you are certainly aware that some 10 studies written in the past year count multiple benefits high-frequency traders bring to the markets. It’s not at all clear where your information on “perpetually” this or that comes from. I suspect it comes from watching too much television!

In certain cases, however, (and far from “perpetually” as you claim), there are circumstances that may allow high-frequency pump-and-dump. You are correct that in these particular situations, low-frequency traders may find themselves at a disadvantage. These situations are precisely the reason why we launched the new software suite designed to help traders large and small to anticipate such situations and to avoid trading with potentially unscrupulous market participants. If you are interested in learning more about the software, please feel free to contact me at +1 646-233-3513.

Hope this helps.
Best Regards.

]]> By: Francis Onukwue http://www.hedgeworld.com/blog/?p=4241#comment-43837 Francis Onukwue Mon, 13 Feb 2012 22:19:09 +0000 http://www.hedgeworld.com/blog/?p=4241#comment-43837 Monday, February 13, 2012 Irene, Your article on the concerns about High Frequency Trading is interesting. Yet I have few comments. Although you try to allay the concerns regarding the monopolistic tendencies of High Frequency Traders, their ability to be the first to access and use pricing movements’ information or even induce same, does not seem to lend itself to being easily explained away. Since it is obvious that the playing field is no longer level for all the players, the question then becomes, "How do we restore the playing field without being perpetually defensive and perpetually watching the offensive High Frequency Actors' perpetually dominating the electronic playing field?" I will appreciate your constructive response to my comment. Thanks for beginning the conversation. Francis Onukwue PhD Candidate (Business: Financial Management). Monday, February 13, 2012

Irene,

Your article on the concerns about High Frequency Trading is interesting. Yet I have few comments.

Although you try to allay the concerns regarding the monopolistic tendencies of High Frequency Traders, their ability to be the first to access and use pricing movements’ information or even induce same, does not seem to lend itself to being easily explained away.

Since it is obvious that the playing field is no longer level for all the players, the question then becomes, “How do we restore the playing field without being perpetually defensive and perpetually watching the offensive High Frequency Actors’ perpetually dominating the electronic playing field?”

I will appreciate your constructive response to my comment.

Thanks for beginning the conversation.

Francis Onukwue
PhD Candidate (Business: Financial Management).

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