stats
globeinteractive.com: Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail /globeandmail.com
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space


Search

space
  This site         Tips

  
space
  The Web Google
space
   space



space

  Where to Find It


Breaking News
  Home Page

  Report on Business

  Sports

  Technology

space
Subscribe to The Globe

Shop at our Globe Store


Print Edition
  Front Page

  Report on Business

  National

  International

  Sports

  Arts & Entertainment

  Editorials

  Columnists

   Headline Index

 Other Sections
  Appointments

  Births & Deaths

  Books

  Classifieds

  Comment

  Education

  Environment

  Facts & Arguments

  Focus

  Health

  Obituaries

  Real Estate

  Review

  Science

  Style

  Technology

  Travel

  Wheels

 Leisure
  Cartoon

  Crosswords

  Food & Dining

  Golf

  Horoscopes

  Movies

  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...

space

Services
   Where to Find It
 A quick guide to what's available on the site

 Newspaper
  Advertise

  Corrections

  Customer Service

  Help & Contact Us

  Reprints

  Subscriptions

 Web Site
  Advertise

  E-Mail Newsletters

  Free Headlines

  Globe Store New

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions


GiveLife.ca

    

PRINT EDITION
Road to riches: 'Speed bumps' slow trade, help most investors
space
space
By ALEXANDRA POSADZKI
  
  

Email this article Print this article
Thursday, June 21, 2018 – Page B1

"Speed bumps," or slight delays in trading, can help protect most investors from the predatory tactics employed by high-frequency traders.

High-frequency traders (HFTs) use lightning-fast computers that allow them to execute millions of trade orders and scan multiple exchanges in seconds. The logic behind speed bumps is to prevent those traders from profiting off that speed advantage.

A study published on Wednesday by financial economist Edwin Hu for the U.S. Securities and Exchange Commission injects a new point of view into the continuing debate about market structure and lends some support to the business models of upstart exchanges such as U.S.-based IEX Group Inc. and Canada's Aequitas Neo Exchange Inc. One of the strategies that high-frequency traders employ is to get other investors to reveal what they want to buy or sell.

For example, if HFTs discover that an investor wants to buy shares of a particular company that they are offering to sell, they can quickly rescind their offer and resubmit it a fraction of a second later at a higher price. Several exchanges have implemented delays in an attempt to stop this.

Mr. Hu based his research on IEX, which has a speed bump that delays orders by 350 microseconds before executing them. IEX also pauses updates to its marketdata feed. Mr. Hu studied U.S.-listed stocks that were heavily traded on the IEX and compared them against those that were not. His research found that the spread between the bid and ask prices was lower for the stocks that were frequently traded on that exchange, suggesting that its speed bump is effective for those stocks.

The study does not represent the views of the SEC or its commissioners.

Jos Schmitt, president and CEO of Aequitas, said he is not surprised by the findings. After all, the company's business model is also predicated on the notion of delaying high-frequency traders and reducing trading costs for regular investors. Aequitas, which was launched in 2015, even draws its name from the Latin word for equality and fairness.

Since the launch of the Neo exchange and the IEX, a number of larger exchanges have introduced speed bumps or started exploring the idea, including the TSX Alpha exchange owned by TMX Group Ltd.

But Mr. Schmitt noted that not all speed bumps are created equal, and that regulators will have to examine them on a caseby-case basis. Some exchanges apply speed bumps differently than others do.

"There will always be different views around this and different interests at play, and you will always have people that will push back on it because it doesn't fit with their strategy and what they want to do," Mr. Schmitt said.

"Will the debate end with a paper like this? No, it's one person at the end of the day ... but at the same time, I think the SEC has been clear that they were very comfortable with the IEX speed bump, and this study seems to confirm that this was the right decision."


Huh? How did I get here?
Return to Main Johanna_Schneller Page
Subscribe to
The Globe and Mail
 

Email this article Print this article

space  Advertisement
space

Need CPR for your RSP? Check your portfolio’s pulse and lower yours by improving the overall health of your investments. Click here.

Advertisement

7-Day Site Search
    

Breaking News



Today's Weather


Inside

Rick Salutin
Merrily marching
off to war
Roy MacGregor
Duct tape might hold
when panic strikes


Editorial
Where Manley is going with his first budget




space

Columnists



For a columnist's most recent stories, click on their name below.

 National


Roy MacGregor arrow
This Country
space
Jeffrey Simpson arrow
The Nation
space
Margaret Wente arrow
Counterpoint
space
Hugh Winsor  arrow
The Power Game
space
 Business


Rob Carrick arrow
Personal Finance
space
Drew Fagan arrow
The Big Picture
space
Mathew Ingram arrow
space
Brent Jang arrow
Business West
space
Brian Milner arrow
Taking Stock
space
Eric Reguly arrow
To The Point
space
Andrew Willis arrow
Streetwise
space
 Sports


Stephen Brunt arrow
The Game
space
Eric Duhatschek arrow
space
Allan Maki arrow
space
William Houston arrow
Truth & Rumours
space
Lorne Rubenstein arrow
Golf
space
 The Arts


John Doyle arrow
Television
space
John MacLachlan Gray arrow
Gray's Anatomy
space
David Macfarlane arrow
Cheap Seats
space
Johanna Schneller arrow
Moviegoer
space
 Comment


Murray Campbell arrow
Ontario Politics
space
Lysiane Gagnon arrow
Inside Quebec
space
Marcus Gee arrow
The World
space
William Johnson arrow
Pit Bill
space
Paul Knox arrow
Worldbeat
space
Heather Mallick arrow
As If
space
Leah McLaren arrow
Generation Why
space
Rex Murphy arrow
Japes of Wrath
space
Rick Salutin arrow
On The Other Hand
space
Paul Sullivan arrow
The West
space
William Thorsell arrow
space





Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page