Trading firms are using everything from lawyers to analysis to level the playing field with the high-speed traders
Virtu, the high-frequency trading (HFT) firm, is playing a
different game to investment managers, but with the same shaped
According to its 2014 initial public offering prospectus,
Virtu, a cross-asset HFT player, only made a loss on one day in
four years of trading. It noted in the same prospectus that the
Commodities and Futures Trading Commission (CFTC) "is looking
into our trading during the period from July 2011 to November
2013 and specifically our participation in certain incentive
programs offered by exchanges or venues during that time
How HFT firms make money is of material interest to other
market participants. HFT order flow will make up 61% of trading
volume in the US futures market during 2014, with volume itself
is expected to grow by 11% year-on-year from 2013, according to
analyst firm Tabb Group. HFT activity can have a significant
effect on the rest of the market. As a consequence, some
traders are looking at ways to minimise their exposure to HFT
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