MFA Urges Against High-Frequency Trading Restrictions

Sep 15 2010 | 2:45am ET

The U.S. hedge fund lobby has weighed in against new rules that would impose market-maker requirements on high-frequency traders.

The Managed Funds Association warned that the proposal to force computerized traders and others with the “best access” to markets to trade during periods of market volatility would have the opposite effect to that intended: making markets more liquid. Some have suggested that high-frequency traders made May 6’s market plunge worse by pulling out of the markets.

“We respectfully urge that you proceed cautiously and introduce changes that are supported by empirical data,” Stuart Kaswell, general counsel of the MFA, wrote to the Securities and Exchange Commission and Commodity Futures Trading Commission. “Changes not supported by empirical data and directed at preventing rare market dislocations, could further harm investors.”

The group also warned the SEC against new rules designed to prevent high-frequency traders from manipulating the markets.

“Proposals to expand the use of speed bumps, delay trading or set maximum execution speeds would cause greater harm to investors by increasing trading and execution costs,” Kaswell wrote.


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of