image

  • HFT firms  profits reportedly have slumped from nearly $5 billion four years ago to $1 billion last year

  • GETCO, the largest HFT player in the U.S.markets profits from HFT shrank 82% last year.

  • Move from Ultra High frequency to Mid frequency strategies might happen as the former gets arbed out.

  • According to a study by TABB Group, HFT is expected to rise to 52% of average daily volume this year. HFT will generate $2 billion in revenue in 2013, TABB Group predicts in a report on U.S. equities. But is the slump in profits going to impact the marketplace liquidity that institutions rely upon?

  • In a few short years it has followed a standard business cycle and may well be heading toward decline. This doesn’t mean it will extinguish itself or that non-HFT traders should abandon their concerns over the practice. It means that HFT practices, both good and bad, will become “institutionalized.”

  • New regulations aimed at curtailing high-frequency trading may be focused on a business that’s actually yesterday’s news.

  • Five Reasons HFT is less profitable

  • Volumes in U.S. equities fell 18.5% last year, averaging about 6.5 billion shares daily, compared with 7.8 billion shares in 2011, according to TABB Group.

  • Volatility on the CBOE VIX plummeted about 19% in the first nine months of 2012, and
    32% during the past 12 months through January, according to a GETCO filing.

  • An increase in internationalization of order flow in U.S. cash equities cut into the market share of electronic market makers.

  • More firms have entered the HFT space, so the competition is intense and the window
    for profitability is shorter.

  • Broker-dealers have invested millions in low-latency network technology and algorithms,
    so it’s harder for HFT to pick them off.