HFT Provides Liquidity in Fragmented and Non-Fragmented Markets

The Issue:

SEC Chairman Mary Jo White pointed out a “market structure concern is fragmentation. Order flow in exchange-listed equities is divided among many trading venues — 11 exchanges, more than 40 alternative trading systems, and more than 250 broker-dealers.” Ms. White said the Commission will “be considering whether the SEC’s own rules, such as the trade-through rule of Regulation NMS, have contributed to excessive fragmentation across all types of venues.”

MMI’s Stance:

Another widespread misconception is that high frequency trading firms (HFTs) or Principal Trading Firms (PTFs) rely on the opportunities presented by having several venues in which to trade. MMI advocates fewer venues and points out that its Members trade successfully in many markets and countries where there is only one exchange.