How banks have hoodwinked you over high frequency trading (video)

I have just heard one of the poorest interviews on the subject of high frequency trading that I have had the misfortune to come across on the usually excellent Today programme on BBC Radio 4. The interviewer, Evan Davis, had the opportunity to question a leading hedge fund manager and supporter of HFT about the quasi-criminal activity which is currently the subject of enquiries by the FBI, Department of Justice and the Securities and Exchange Commission. The opportunity was not taken and instead we were treated to five minutes of half-truths and accusations from the fund manager which Davis was simply not able to counter.

For those who would like to understand the scandal the main points are covered in the Michael Lewis interview below.

First, here’s an introduction to high frequency trading and its associated market risks by the More or Less team on Radio 4 back in 2012:

High speed trading forms a substantial part of all market

Now you have the basics here is Michael Lewis explaining how high frequency traders are exploiting their market position to undertake legal ‘front running’ and make profits from your trading without you even being made aware that the market is rigged against you.

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