Study shows HFT doesn't boost volatility, but critics question methodology

A study prepared at the request of FIA shows that there has been no increase in global market volatility correlated with high-frequency trading. "We don't deny that high-frequency trading can cause temporary problems," said Nicolas Bollen, one of the study's authors. "What we do show is that at typical measurement frequencies -- daily and monthly, for example -- volatility levels do not appear to be affected by the rise in high-frequency trading." Some critics, however, have questioned the methodology of the study, which used five-minute intervals to measure HFT's effect on the markets.

View Full Article in:

Vanderbilt University (Nashville, Tenn.) · (subscription required)

Published in Brief: