Asian buy-side traders are highly concerned about high-frequency trading and their ability to source local liquidity, according to a survey conducted by Liquidnet, which asked 115 buy-side traders around the world, including Asia, about the issues that currently pre-occupy them.
According to Liquidnet’s ‘Institutional Voice Survey’ results, 84% investors are either ‘concerned’ or “very concerned” about sourcing liquidity in the current market.
‘Institutional traders, including those in Asia-Pacific, are challenged to source liquidity for large trades,” said Lee Porter, head of Asia-Pacific at Liquidnet. “The survey’s findings clearly show that these concerns are rising in the current market conditions, where macro factors are adding to volatility and often reducing the opportunity to source liquidity, particularly in size on public markets.”
Three-quarters of traders surveyed believe that that HFT strategies negatively impact some orders and almost 90% of investors are concerned about predatory traders in dark pools.
Porter said that the survey results highlight that globally institutional traders, including those in Asia, were concerned about access to liquidity, conflicts of interest, transparency and trust, but he still expressed grounds for hope.
“Market confidence is key moving forward, with many respondents indicating that, as market confidence increases, there will be greater inflows,” he said. “China and India are seen as two markets with particularly high investment potential, ranking third and fourth, according to the traders polled globally.”