About a decade after the arrival, and subsequent takeover of the market by high-frequency traders [8]...
[9]
... 6 years after the start of our crusade [10]to purge the capital markets of the 2nd worst scourge to capital allocation efficiency and fraud, the first being of course the central banks, and 5 years after the flash crash, we just realized that we, and all those others who caution every day against the threat that HFT poses every single day, have finally made an epic breakthrough. To wit:
- LEW SAYS GOVERNMENT TRYING TO UNDERSTAND HIGH-FREQUENCY TRADING
That's right: the US Treasury Secretary is finally trying to figure out what all this buying and selling and buying and selling (repeat that 1 million times in one second) is good for. Well... it was about time.
So to help out Jack Lew on his quest to understand why the market is rigged, and is, as even former SEC directors admit, "two-tiered", we could point him to the full explainer we wrote just for this purpose last April in "High Frequency Trading: All You Need To Know [11]", but since we know US officials have a limited attention span, we will instead direct him to the latest revelation from the revised Virtu S-1 ahead of its second attempt at an IPO (following the massive revulsion to all things vacuum-tuby, market-tuby in the aftermath of Michael Lewis' Flash Boys).
So here, dear Treasury Secretary, is all you need to know about HFT from the mouth of the most dominant HFT market player itself: [12]
The chart below illustrates our daily Adjusted Net Trading Income from January 1, 2009 through December 31, 2014. The overall breadth and diversity of our market making activities, together with our real-time risk management strategy and technology, have enabled us to have only one overall losing trading day during the period depicted, a total of 1,485 trading days...
[13]
[14]
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And with that, now you know all there is to know about HFT.
