In an effort to eliminate alleged unfair advantages provided by trading venues to high-frequency traders, New York Attorney General, Eric Schneiderman, has called for tougher regulations and market reforms in a speech made on March 18, 2014 at a symposium hosted by New York Law School. The Attorney General’s speech is only part of a wider initiative launched last year examining advantages provided to high-frequency traders.
The Attorney General cites a number of services offered to high-frequency traders, including allowing traders to locate their computer servers within trading venues, providing extra network bandwidth to high-frequency traders, and attaching ultrafast connection cables and special high-speed switches to their servers, as providing high-frequency traders with the ability to make rapid trades in advance of the rest of the market, and claims that this is damaging the market as a whole. While often only a timing advantage of milliseconds, due to these services, high-frequency traders are able to obtain data feeds with pricing, volume, trade and order information in advance of other market actors.
High-frequency trading involves a significant proportion of overall trading on most markets.
For further details, see the March 18, 2014 press release available on the Attorney General’s website.