High-frequency trading is negative for long-only investors who make stock trades of considerable size, says a Liquidnet survey of more than 300 traders at asset management firms around the world.
“Investors are clearly concerned that their long-term investment styles are at odds with the speculative, nano-second profit taking approach utilized by high-frequency traders,” said Seth Merrin, founder and chief executive of Liquident, in a statement.
Research analysts Aite Group and Tabb Group say that almost 75 per cent of overall daily equity trading can be attributed to high-frequency trading. More than half of those surveyed by Liquidnet in Asia-Pacific are concerned about high-frequency trading.
Liquidnet matches buyers wanting to buy large blocks of stock with sellers who wish to sell large blocks, anonymously through its own so-called dark pool. The company charges an execution fee of about 10 basis points.
“From talking to domestic members the survey’s results are indicative of the views of the Australian fund management industry,” says Sam Macqueen, director of Liquidnet in Australia. “Traders are more worried about leakage than ever before.”