HFT still divides opinion

Author: Lizzie Meager | Published: 25 Nov 2016

Conflicting reports on the treatment of high frequency trading (HFT) highlight just how much the practice continues to split market participants.

While the findings of both reports, released in the same week, are largely consistent, the conclusions reached by the two central banks, Germany’s Bundesbank and the European Central Bank (ECB) are at odds with each other.

Advocates argue that high frequency traders provide badly needed liquidity

“We’ve been having this discussion for at least five years now and it’s remarkable that after all the research and reports, we’re still struggling in exactly understanding how it works and what its impact is,” said Andreas Wieland, partner at White & Case in Frankfurt.

The Bundesbank argues that traders’ orders should be held for a fraction of a second. But the ECB stresses the need for further research before regulation, suggesting using existing tools in the meantime like...