Panelists mull HFT, market resiliency in SEC-NYU dialogue

By Amy Leisinger, J.D. Industry participants and academics discussed the “need for speed” among traders and the evolution of market making at the SEC-NYU Dialogue on Securities Market Regulation. Several panelists noted that the high-frequency trading (HFT) race and continued efforts to increase automation can lead to decreased focus on the actual work involved in the trading process and, as a result, a less-than-optimal outcome for investors. Further, panelists suggested that market makers aim to provide liquidity throughout the trading process but that shocks to the market can limit the risks they are willing to take. In a discussion of resiliency in markets where HFT firms are most likely to have an influence, panelists considered how uncertainty and fragmented markets affect liquidity provision and ultimate recovery from demand shocks. SRO practices and automation. Considering whether regulations and SRO practices have incentivized the “HFT arms…

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