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Thomson Reuters Industry Poll Reveals Market Implications Around High Frequency Trading

Thomson Reuters today announced the results of its interactive poll on the impact of high frequency quantitative trading. Over 100 buy-side and sell-side members of the trading community were surveyed during a Thomson Reuters forum addressing the exponential growth of high frequency trading and capital inflows into quantitative strategies.

When asked what effect the rise of high frequency traders had on sourcing liquidity and executing trades, 70% of respondents felt that they made execution easier and brought additional liquidity. Nearly 40% of respondents believe that the main impact of growth in high frequency trading is increased market liquidity whilst only 6% believe that the main impact is eroded investor confidence.

Rich Brown, Global Business Manager, Machine Readable News, Thomson Reuters, said: “The trading landscape has changed dramatically and become far more competitive as a growing number of participants implement quant strategies with substantial capital at their disposal. The poll indicates that despite recent controversy around high frequency trading and the large profits made by some firms, it does have positive implications for the market, primarily by providing additional liquidity.”

Other key findings of the poll included:
•More than half the respondents considered high frequency trading to be sub-second, with 27% distinguishing it as sub-millisecond
•63% of the respondents believe that high frequency trading could potentially pose a risk to the market with only 27% believe it is probable and 10% believing a crash is imminent
•96% of the audience felt that regulators are not fully up to speed regarding the implications of high frequency trading
•70% of respondents believe that high frequency trading could become a problem for a fund manager; 30% believe this problem could be major
•When asked how often risk metrics are recomputed, 54% stated that they are tracked in real-time with every trade. Of those firms that don’t compute in real-time, most believe they are not calculated frequently enough