Peter Nabicht: High-Speed Trading Isn’t Just Faster, It’s Also Fairer

Wednesday, March 26, 2014

There’s always a charged reaction when any market policy discussion reflects on the pace of change taking place in our financial markets.

But this is not a debate that should be conducted based on perceptions or emotions running high. Instead, it is a debate that should be based upon facts and conducted with an examination of data.

There is no doubt today’s financial marketplace has changed. Scrums of floor traders are a thing of the past. Open outcry pits have emptied out and largely fallen silent, their ranks having dwindled to just a handful.

In its place now stands a fully transformed market. Professional traders using electronic trading platforms and low latency trading technology have modernized and democratized the markets, delivering greater competition and efficiency for the investor.

So, yes, financial markets have evolved into a faster and fairer marketplace than the slower, less efficient manual market of the past. How do we know this? The empirical evidence tells us so. Studies examining market data demonstrate the investments in technology made by market participants have led to a more efficient marketplace.

Critics of technological advancements in the market do not ground their arguments in data. Instead they base their appeals on opinion, seeking to generate animosity and skepticism towards high frequency technology, automation and electronic platforms. Yet, these are advancements in the market that, were they achieved in any other industry, would be welcomed and promoted.

To stand in the way of technological advances is to stand in the way of efficient markets and fair prices. Removing technological advancements from the markets would hamper market stability and cost investors money.