Despite Concerns About High Frequency Trading, Financial Industry Participants Have Not Changed How They Interact With Markets
NEW YORK, April 24, 2014 /PRNewswire/ -- ConvergEx Group, a leading provider of global brokerage and trading-related services, has released the results of its U.S. Equity Market Structure Survey, exploring the concerns and actions of financial industry participants regarding high frequency trading (HFT), regulatory oversight and market stability. The survey found that a majority of respondents believe that U.S. equity markets are currently not fair for all participants (70%) and that HFT is harmful to market participants (51%). Despite these concerns, almost three-quarters of respondents (71%) report that they have not made any changes to the way they interact with markets.
"In offices and on trading floors, the conversation is consumed by issues concerning market structure," said Eric Noll, president and chief executive officer of ConvergEx Group. "Our survey reveals a financial community that is not yet sure how to respond to HFT and the rapidly changing marketplace. ConvergEx is committed to helping its clients navigate this evolving structural and regulatory landscape."
For more information on the U.S. Equity Market Structure Survey, click here.
An Uncertain Status Quo
Respondents to the survey revealed significant concerns about the way U.S. markets are currently structured and the role that HFT plays. Key findings:
- U.S. equity markets are not fair for all participants – 70%
- HFT is harmful or very harmful to market participants – 51%
- HFT is helpful or very helpful to market participants – 19%
Not (Yet) Taking Action
Despite concerns, the HFT debate has not led to significant changes by industry participants. Fewer than one-quarter reported making any changes at all. Key findings:
- Have not made any changes – 71%
- Have made slight changes – 20%
- Have made significant changes – 2%
Financial industry participants believe that regulatory changes can provide answers. Only about one-third (38%) of respondents believe current levels of regulation are appropriate for today's market structure. Key findings:
- More regulation needed – 43%
- Same amount of regulation – 38%
- Less regulation – 19%
Search for Stability
A clear split exists on whether U.S. equity markets could withstand the volume resulting from a geopolitical crisis or other large volatility shock. Key findings:
- Confident markets could handle a large volatility shock – 30%
- Very confident that markets could handle a large volatility shock – 8%
- Not confident or not-at-all confident that markets could handle a large volatility shock – 40%
ConvergEx Hosts "Flash Forward"
On April 23, Eric Noll addressed more than 150 buy-side clients at a panel discussion entitled "FLASH FORWARD: Advancing the Discussion on High Frequency Trading". Mr. Noll unveiled the findings of the U.S. Equity Market Structure Survey and introduced a panel discussion of key financial industry executives, moderated by ConvergEx chief market strategist Nicholas Colas. Representatives from the buy-side (including HFT firms) and sell-side, top exchange executives and service firms addressed ConvergEx clients on high frequency trading and its impact on market structure.
U.S. Equity Market Structure Survey Methodology
The ConvergEx Group U.S. Equity Market Structure Survey was performed by ConvergEx via an online survey of financial industry participants, resulting in 357 respondents. The survey was conducted from April 16 - April 21, 2014, and has a margin of error of ± 10%. Respondents included buy-side firms (asset managers, hedge funds), sell-side firms (banks, broker-dealers), exchange operators, service providers, journalists, and other financial industry participants.
About ConvergEx Group
ConvergEx Group is a leading provider of global brokerage and trading-related services for institutional investors and financial intermediaries. ConvergEx combines client-first service with innovative products, sophisticated strategies and proprietary technology to meet the challenges of increasingly dynamic and fast-paced markets. Headquartered in New York with a presence in several other key locations including London, Chicago, San Francisco, Boston and Atlanta, the company serves more than 3,000 clients accessing over 100 global market centers.
ConvergEx Group includes ConvergEx Execution Solutions LLC (member NYSE/FINRA/SIPC); LiquidPoint, LLC (member CBOE/SIPC); G-Trade Services LLC (member FINRA/SIPC); Westminster Research Associates LLC (member FINRA/SIPC); ConvergEx Prime Services LLC (member FINRA/SIPC); ConvergEx Solutions LLC, of which ConnEx, Jaywalk and LDB are divisions; and ConvergEx Limited in the UK. ConvergEx Group, LLC is a subsidiary of ConvergEx Holdings, LLC. Additional information is available at www.convergex.com.
Contact: Michael Kingsley
SOURCE ConvergEx Group