![High-frequency trading enhances market quality: Report](https://www.benefitscanada.com/wp-content/uploads/sites/7/2010/12/graph-increase-market-rise-e1494619786754.jpg)
Critics say high-frequency trading (HFT) puts institutional and retail investors at a speed disadvantage, but a C.D. Howe Institute report disputes that claim.
“High-frequency trading is taking world capital markets by storm, notably in the United States and the United Kingdom, where it accounted for about 50% of equities trading in 2012, and to a growing extent in other parts of Europe and in Canada,” says Jeffrey G. MacIntosh, author of the report High Frequency Traders: Angels or Devils?
HFT is blamed for the May 2010 Flash Crash when the Dow Jones Industrial Average dropped more than 9% in a few minutes.
However, the report concludes that HFT enhances market quality by lowering bid/ask spreads, reducing volatility and helping create competitive pressures that reduce broker commissions.
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