I have received a number of questions since “60 Minutes” ran a piece on high-frequency trading (HFT)on March 30 (lest we forget, this is the same “60 Minutes” that ran a piece in 2010 that predicted the municipal market would implode in 2011, and we all know how that turned out). I’ll summarize what I think we know about HFT at this point, a viewpoint that runs counter to the perspective offered on “60 Minutes.”
What Is HFT?
Larry Harris, professor of finance at the University of Southern California, has spent an academic career studying trading in equity markets, and he categorizes high-frequency traders into three areas:
1) Market makers
2) Fundamentally driven traders
3) Front-runners
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