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Bart Chilton Has Something To Say About High-Frequency Trading

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And the flaxen-maned former CFTC commissioner said it—basically the same high-frequency traders aren’t evil but should be regulated stuff he pedaled during his regulatory years—with nary a metaphor or folklore reference in sight.

For four years, I have been raising issues with high-frequency traders, but we should have our eyes open to the positives and negatives. 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….

The bottom line is that high-frequency traders provide professional grade intermediation in modern capital markets and are an important part of the industry discussion espoused by Ms. White. High-frequency trading — done for profit, for sure — moves supply and demand among long-term investors quickly and efficiently. This serves an important function, reduces volatility and helps make markets better. This is why IEX needs them, the stock exchanges need them and so do all the bank dark pools.

The question now is: What can be done to improve the circumstances and investor confidence in markets and trading?

It is still an amazing mystery to me, and shocking to some, that many high-frequency trading firms are not even required to register with the S.E.C. or the Commodity Futures Trading Commission. That means regulators at times may not have direct access to books and records needed for investigations….

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.

No Need to Demonize High-Frequency Trading [DealBook]