It’s "back to the future" for electronic trading firms

FT.com published another good article on the state of high frequency trading that aligns pretty well with the shifts we have seen in the market. The theme of the article is that opportunities in HFT are becoming less abundant and, as a result, many HFT firms are turning back to quant strategies that differentiate based on unique market pairings or predictions of where the markets will move.

As one of our customers that chose to sidestep HFT from the beginning told us:

“Differentiating on speed is not appealing to us. There can only be one fastest, and even if it is you today, it probably won’t be tomorrow.”

There’s no doubt that electronic trading will continue to dominate volumes, but expect the focus to shift back towards unique arbitrage and quantitative strategies for many current HFT participants.