Posted on 12/02/2009 1:09:24 AM PST by TigerLikesRooster
European markets' choice: Cut milliseconds or die
Wed Dec 2, 2009 1:24am EST
By Jane Baird
LONDON (Reuters) - Increasing demand for instantaneous trading is driving Europe's stock exchanges and other equities markets to spend heavily on technology to stay competitive -- and not all of the 33 players will survive.
Small venues that cannot attract enough liquidity or afford to keep up with rivals are likely to fall by the wayside or become niche venues dedicated to specialized domestic markets.
"In the end, you are going to see three or four major execution venues account for close to 80 percent of all pan-European trading," said Sang Lee, managing partner specializing in market structure at consultants Aite Group.
In Europe over the past 12 to 18 months, high-frequency trading has grown to account for an estimated 35 to 45 percent of all equity trades at the biggest venues.
High-frequency traders use algorithmic, or automated, trading to seize on pricing anomalies, trends or events and execute trades instantly. The programs make many thousands of trades in a day, each of a modest size in a liquid stock to capture the intended price.
"The ability of high-frequency traders as a group to exercise buyer power and shape market infrastructure is massive," said Instinet Europe Chief Executive Richard Balarkas.
(Excerpt) Read more at reuters.com ...
Ping!
Seems like a lot of opportunity for sudden disaster.
Joe Sixpack has to pay at least 5$ to make a trade. How much are the high frequency traders paying? I know they have cut out the middlemen but they still have to pay something. They are skimming money....it’s like a hidden tax on everyone else
Best I can tell is-— if I buy 100 shares of X I will pay a bit more (lets say two dollars) due to their front running and other tactics
Not only that, it also discourage any action to tackle some fundamental problems, which can create short-to-mid term disruptions in the market.
The farce continues: be calm. Be happy. Ignore problems. Keep the financial indices high.:-)
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