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September 17, 2013

High-frequency trading: Business gets tough for Wall Street gunslingers

The prospects of a return to the good old days continue to fade for Wall Street’s fastest gunslingers. These are the trading firms that dart in and out of shares at rapid-fire speeds using sophisticated technology to make fractions of a penny.

Nearly five years have passed since cumulative profits peaked for high-frequency trading (HFT) companies that buy and sell stocks at millisecond speeds on the US market, according to industry estimates.

As competition has stiffened between those that survived the downturn, the conditions that allow companies to thrive have deteriorated since HFT’s most profitable days.

Optimism that daily US trading volumes will return to pre-crisis levels has faded, as have the frantic bursts in volatility that send shares in diverging directions, creating the opportunities that lured so many entrants into HFT.”

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Read full Financial Times article here

 
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