Industry Super Network claims HFT costs Australian investors $1.5bn per year while others argue it is irrelevant - how do we reconcile these claims
BestEx Asia Ltd
Industry Super Network claims HFT costs Australian investors $1.5bn per year while others argue it is irrelevant - how do we reconcile these claims? Both are correct. The Australian market structure is more balanced than the US with less fragmentation, standardised co-location, messaging taxes and a ban on payment for order flow. Yet opportunities exist for HFT to employ latency arbitrage or liquidity detection techniques, neither of which are illegal and both of which reflect innovation deserving of reward. We often hear portfolio managers say trade execution does not impact their performance because they are low-turnover, long-term investors. They rely on their brokers to choose trading venues, unaware that doing so may place them in the firing line of predatory trading. HFT should not be a major issue in Australia. The extent to which it is depends on whether individual managers have adapted the way they implement investment decisions. (VIEW LINK)
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