Controversy over high-frequency trading, fomented by Michael Lewis’ new book, highlights the conflict many chief investment officers experience over the practice.
On the one hand, both pension fund executives and their external money managers are grateful that the development of electronic trading and the competitive exchanges established to serve the growing high-frequency trading segment has dramatically lowered trading costs.
On the other hand, it’s maddening for many CIOs to suspect their portfolios’ returns might be harmed from front-running by high-frequency trading algorithms.
A Pensions & Investments’ online reader poll conducted last week showed 51.5% of respondents believe high-frequency trading is bad for institutional portfolios, while 17.1% said it’s good. The remainder said it was neither good nor bad.
For the full story and who said what, please visit P&I