| Is it not true that HFT generally increases market liquidity and decreases volatility? That's the conventional wisdom, but it isn't at all clear that there is actually evidence to support it. eg: A majority of British asset managers, pension funds and corporate treasurers polled in a UK government-sponsored study are sceptical that “high-frequency” trading provides liquidity to markets. http://www.ft.com/cms/s/0/c3dce154-6301-11e1-9245-00144feabd... Taken together, this evidence suggests something important. Far from solving the liquidity problem in situations of stress, HFT firms appear to have added to it. And far from mitigating market stress, HFT appears to have amplified it. http://marginalrevolution.com/marginalrevolution/2011/10/mor... Personally, I like the idea HFT - but it isn't at all clear it is actually beneficial. (Edit: I can't understand why anyone would downvote you for that question. It seemed reasonable to me...) |