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Benedicte Gravrand, Opalesque London:

Over the past year, the topic of high frequency trading (HFT) has increased in resonance within the financial markets. The sheer volume of trading is daunting and technology is indicating a movement to ever-increasing speed and lower latency. It is estimated - by some - to account for two-thirds of daily U.S. stock volume and probably just as much in Europe.

The practice has provoked heated debates, as some say that it drives up prices and others say that it provides liquidity in the markets. So this is a space to watch. It is certainly being watched by regulators in North America and in Europe at the moment.

The problem is, the benefits and disadvantages (to the market) of HFT are not really clear to anyone. A survey conducted by Greenwich Associates in Oct-09, for example, revealed there was little empirical data to demonstrate whether high-frequency trading benefited the market as a whole by providing liquidity, or unfairly increased trading costs for investors. Even some of the most active institutional stock traders cannot agree about whether high-frequency trading helps or hurts institutions, retail investors and the companies with publicly trading stock. Until these questions are answered, Greenwich said, regulators should limit any new rules to narrow trading practices that have an obvious and proven negati......................

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