GLOBAL - More than two-thirds of institutional investors are concerned about the impact of high frequency trading (HFT) on the equities market, research has found.
A survey by of 630 institutional asset management firms by institutional marketplace Liquidnet revealed there was a "strong conviction" among traders that HFT has a negative impact on institutional investors trading in large size
According to studies by independent industry research analysts Aite Group and Tabb Group, almost 75% of overall daily equities trading can be attributed to high frequency trading.
Liquidnet founder and CEO Seth Merrin said "Investors are clearly concerned that their long-term investment styles are at odds with the speculative, nano-second profit taking approach utilised by high frequency traders."
"Institutional investors who manage trillions of dollars on behalf of investors need to be able to get in and out of positions in a safe and efficient manner away from the retail markets and internalisation engines where HFT thrives, particularly in the volatile markets like we have been seeing recently."
The survey found global traders are significantly more concerned with HFT compared to those who only trade in their regions. At the top five global institutions, 73% of the traders said they regarded high frequency trading as a high-priority market-structure issue.
Traders concerns around HFT ran the highest among those based in North America, with two-thirds identifying themselves as concerned about HFT. Nearly 60% of European respondents and more than half in Asia Pacific expressed concern regarding HFT's impact on trading performance.
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