High-frequency trading is getting a low grade from one ex-regulator.
Super-fast trading firms are preventing competition and should be regulated as brokers and traders, according to a statement by former Commodity Futures Trading Commission economist Andrei Kirilenko.
Kirilenko, who’s currently a professor at MIT, is scheduled to give testimony before a Senate panel on Tuesday.
The hearing in front of the Agriculture, Nutrition and Forestry committee, headed by Sen. Debbie Stabenow (D-Mich.), will be its first devoted to high-frequency trading (HFT).
HFT uses computer programs and fiber-optic cables to make trades in a matter of milliseconds. That kind of speed can give some firms an unfair advantage, critics like Kirilenko say.
Other witnesses at the hearing may be less willing to criticize HFTs.
Supporters of the controversial practice, like CME Group President Terry Duffy, who backed it in a statement Monday, feel it makes for more readily available trading and a smaller gap between the bid and ask prices.
“This balance of regulation and surveillance, liquidity and access, gives farmers and businesses, and money managers and traders, the confidence to rely on our markets to effectively manage risk,” Duffy said.
HFT has received increased regulatory attention since Michael Lewis’ best-seller “Flash Boys: A Wall Street Revolt,” ripped the practice as rigging the markets.