Modern Markets Initiative (MMI), an industry body set to up to promote the benefits of high frequency trading, is making a new effort to demystify the firms.
In a new video, senior executives at four HFTs — Global Trading Systems (GTS), Hudson River Trading, Quantlab Financial and Tower Research Capital — make a case for their style of trading to the average investor.
HFTs, which moved in to the mainstream after Michael Lewis' book Flashboys, use technology to trade at blazing fast speeds.
"Using computers you can trade 100s or 1000s of securities all simultaneously and trade them all much more frequently," Cameron Smith, president of Quantlab Financial, said in the video.
They've been vilified on Wall Street, and have been accused of using their speed to front run large orders from huge institutions like pension funds.
In the video, the HFT execs make a case for the benefits they bring to markets. Smith at Quantlab said that investors have never received better prices for a lower cost than right now. Mark Gorton from Tower Research Capital added that the average investor "should be very happy that they are saving money thanks to the new automated markets."
These technology-driven firms are often responsible for a high percentage of total trading, can be hugely profitable and operate around the world 24 hours a day.
Tower Research Capital for example has more than 400 staff across Chicago, South Carolina, London, Singapore, Hong Kong and India. It's subsidiaries include Latour Trading and Spire Europe.
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Hudson River Trading meanwhile was reported in 2014 to be responsible for 5% of all US stock trading.
And here is a transcript of what is said:
Ari Rubenstein, CEO of GTS
Technology has transformed so much of our lives. There is no reason why that technology can't improve on how capital markets function, making them more efficient and transparent. We want that technology in our markets.
Jason Carroll, MD at Hudson River Trading
The stock market had almost zero tech innovation. We had a situation where people were literally yelling prices across the floor and making decisions in their heads about what they wanted to buy, how much they wanted to buy, what price they wanted to buy. The consequence was that the cost was relatively high. US equity markets were ready for a technological revolution.
Cameron Smith, president, Quantlab Financial
Using computers you can trade 100s or 1000s of securities all simultaneously and trade them all much more frequently. That is how we got to this term to HFT. You now have no barriers to entry. Anyone can come in and compete. Investors have never received better prices for a lower cost than right now.
Mark Gorton, founder, Tower Research Capital
The most positive development on Wall Street in the last twenty years is the advent of electronic trading. You used to have a lot of very highly paid people on Wall Street. A lot of those jobs have been automated away. For average investors around the country, they should be very happy that they are saving money thanks to the new automated markets.
