Salient to Investors:

Jeff Reeves of writes:

  • Manipulating the markets with high-frequency trading is extremely complicated, hard to track, and even harder to determine violations of laws or regulations.
  • Half of all trading volume in US equity markets supposedly involves high-frequency trading (HFT), which is now a global concern. HFT represented 39% of the total European stock market according to 2012 data. The destabilizing force of HFT will only increase as the technology evolves.
  • The Congressional Research Service says HFT provides “phantom liquidity”. Michael Lewis says HFT divides the market into predator and prey. Help for small investors is not on the way any time soon. Even when caught, HFT bad actors just pay a relatively small fine and continue.
  • Retail investors are disadvantaged with unfair prices or fees, and are at risk should a HFT robot crash the market. Small markups take a serious toll on small-time investors. E.g. $100,000 invested in the market earning a 7% annual return grows to $543,000 after 25 years, but only $518,000 if incurring only 0.2% annually in extra fees or expenses.

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