Business

To take the example to an extreme, consider how many real estate or private equity transactions are currently executed by a computer versus a human being. Being an 'alpha-less market maker' in such a market is not possible.

To give a sense of perspective, consider that an HFT making $0.001 per share in SPY has an alpha that is worth roughly 0.0008%. A one penny spread is ten times this amount. In contrast, long term investors are able to effectively employ active strategies. Their alphas are orders of magnitude greater than the cost of crossing the spread.

Once one understands the disadvantage of being at the bottom of the stack, it becomes much easier to understand the importance of speed in HFT. As new price levels form, HFTs compete with other HFTs to join the new price as quickly as possible in order to secure advantageous stack position for passive orders.

The majority of US Equity HFT is employed in the strategy of liquidity provisioning, also known as electronic market making. Historically, such a service was provided by NYSE specialists and NASDAQ market makers but, with the advent of decimalization, human specialists and market makers were no longer able to keep up with the liquidity demands of investors and automated technology became necessary for this function.

I think the biggest risk is the situation with the EMU as I have explained. I can see that this has the potential to derail the world economy in the same way the 2008 credit crisis did.

Economist who coined the term "BRICS" for emerging markets.

This decade, their GDP will increase by about $12 trillion, i.e. they will create another one of themselves! More importantly, the share of consumption in this decade's growth will be bigger and this is where the big opportunity lies.

Economist who coined the term "BRICS" for emerging markets.

I think you'll see strong growth in the markets in developing economies like Brazil, India, China, Mexico, Malaysia, Singapore and places like that. In that sense, it will be a larger market- a growing pie- risk in that sense will be distributed more.

Former CEO of CME Group, global derivatives exchange leader.

These markets will become a crucible for innovation and dynamic change. This will give more growth to derivative markets as we move forward.

Former CEO of CME Group, global derivatives exchange leader.

If you look at the notional value of trading on our exchanges in any given year, they range from $600-700 trillion to a quadrillion dollars in total value. People can use these markets very effectively, not just for bona-fide risk hedging and transfer and risk management but also for asset allocation, portfolio management and trading strategies as well.

Former CEO of CME Group, global derivatives exchange leader.

One of the things which is a really distinguishing factor about our markets in contrast to the OTC derivative market is that we're completely open, competitive and transparent with a very high degree of participation, a very high turnover, and a high degree of pre and post trade price transparency.

Former CEO of CME Group, global derivatives exchange leader.

It's been a very difficult time, that's why we're here. We're here to preserve people's risk hedging and transfer needs.

Former CEO of CME Group, global derivatives exchange leader.

In our paper we report an 86% accuracy in predicting the up and down movements in the Dow Jones three or four days out. The question is how you turn that into a money making strategy. It could be- for example- that you lose ALL your money in that other 14%!

Unknown.

As an economy is declining, we see an increase in sell-side interest across all asset classes, as holders are looking to get liquidity and shore up their own balance sheets. As far as an up-economy, that's where we see buy-side interest as buyers get greater risk-tolerance.

The ability to bake your business over a longer period of time and become a stronger public company is therefore critical and is a driver for why they list with us.

Investors are always looking for something different, where they can get Alpha… where they can get diversification… where they can get non-correlation. It's not necessarily linked to them being 'US Assets' but more that they are unique assets regardless of domicile and they have not previously had access to them.

The public markets have slowly but surely become hostile to the small growth companies. Where the public markets used to serve any type of company, they are now only beneficial to companies in excess of a $1 billion market-cap. Sub $1 billion companies really don't have a place to turn for funding, growth and liquidity.