Press Release: Capital Markets Cooperative Research Centre
CMCRC, the Australian independent academic centre for capital market research, has found that high-frequency trading (HFT) actually benefits capital market structures and performance, while dark pools may have damaging effects.
Speaking at an event in Beijing, Professor Frino outlined his research that showed that HFT activity adds real liquidity to markets and has no impact on price volatility — surprising findings, as HFT has regularly been accused of negatively impacting these measures of market quality.
“High frequency traders now account for more than 50 percent of trading volume in some global markets, whereas seven years ago it was virtually absent from markets,” Professor Frino said. “Alongside this trend is an explosion in so-called ‘dark pools,’ in which investors are executing their trading in invisible or non-transparent markets. Dark pools are making trading on exchanges less relevant.”
via New Research Busts High-Frequency Trading and Dark Pool Myths — CMCRC – Yahoo! Finance.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.
I would have thought that dark pools are a result of high frequency trading — an attempt to action large buy or sell orders without falling prey to predatory algo-sniffers.
Agree completely with Colin. The current market is different in other ways too – what happened to renouncable rights issues? Shareholders are now not being treated equally.
Given the technology used by HFT is constantly evolving the value of this ‘research’ is questionable …
More than questionable, but I try to cover both points of view.