US institutional investors are less worried about high-frequency trading (HFT) in 2015, one year on from the publication of Michael Lewis’ ‘Flash Boys’ book.
A survey conducted by US-headquartered broker Convergex found 57% of firms believe markets are still not fair for all participants, though this had fallen from 70% a year ago.
One third of respondents identified HFT as being harmful or very harmful for investors, down from 51% in 2014.
However, the number of traders that have changed the way they interact with markets as a result of the HFT debate has doubled to 42% over the same period.
In the wake of Flash Boys’ publication, the New York Attorney General, Eric Schneiderman, launched legal action against Barclays for allegedly misrepresenting the extent of HFT in its dark pool, with similar accusations made against other pools.
The book has brought HFT up the agenda of both regulators and end investors, though most institutional trading desks were already well aware of the risks of being exposed to HFT.
Several anti-HFT projects have received significant attention. The book itself focused on the founding of IEX, a US-based exchange that implements mandatory time delays on orders, making latency arbitrage strategies almost impossible to execute successfully.
Just last week, Canada saw the launch of Aequitas NEO, a new exchange which is also looking to curb HFT by prioritising resting orders and implementing speed bumps for firms looking to profit from latency arbitrage or rapidly placing and cancelling orders.
Eric Noll, president and CEO of Convergex, said: “Wall Street’s perception of markets has clearly shifted. Today’s market structure is complex and challenging. Investors are more comfortable now than they were a year ago, but they’re still largely unsure of how this impacts them and what changes they should make to the way they trade.”