How BM&FBOVESPA is creating a safe market for HFT.
Thanks to some very
competitive exchange prices for day trading, the high frequency
trading (HFT) community has started to set up shop in Brazil.
Current estimates suggest that five percent of trades on
BM&FBOVESPA can be attributed to high frequency traders
and, with a policy in place to attract more, that number is set
The jury is still out about the
benefits that HFT brings to any market. Its proponents will
argue that high frequency traders provide what amounts to a
market-making activity that creates valuable liquidity and has
been credited with reducing bid/ask spreads and making markets
more efficient for everyone. On the other hand, HFT firms are
not obliged to always make liquidity available and so have been
criticized for pulling out of markets when conditions are
volatile. The naysayers point to the dramatic fluctuations in
price in the US, and lay the mini-crashes firmly at the feet of
high frequency traders.
This article is available to subscribers and registered users
Please log in to continue reading.
Not yet registered? Take a free trial.
If you have already taken a free trial you
have ongoing access to the analysis section of FOW.com including this story.
Log in using your details below to read.
Already have an account? |