GreySpark: HFT Growing Despite Regulation

In the paper, High-Frequency Trading: The Fast and the Furious, GreySpark says HFT will continue to capture more market share of electronic asset classes for years to come.

Regulation may in fact make the trading environment safer for HFT, rather than jeopardizing the practice, according to the paper. All market participants interviewed for the report said this should be the regulators' aim: to enhance the safety of HFT, rather than seeking to prohibit the practice.

"Advances in the speed and technical complexity of HFT systems designed to find liquid arbitrage opportunities are daunting to many market observers," says Jon Batty, managing consultant at GreySpark. "As a result, the exact nature of HFT and how it differs from specialized algorithmic trading or general e-trading creates misunderstandings when negative market events occur, caricaturing public perception of HFT systems."

The paper is the first of a two-part series on HFT. The second, which will be released early next month, will focus on HFT risk management protocols.

Advances in the speed and technical complexity of HFT systems are daunting to many market observers. As a result, the exact nature of HFT creates misunderstandings when negative market events occur, caricaturing public perception of HFT systems.