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Letter: In defense of traders

I wish to correct a few points made by Mark Connolly in his recent commentary (Monitor Forum, July 12).

While he is correct that “gaming” does occur in today’s marketplace and that it should be rooted out, it is incorrect to assert that abusive practices are limited to one kind of trading.

It is also wrong to allege that all professional traders employing algorithmic strategies have an unfair advantage in the marketplace. Today’s marketplace is far from perfect, but the facts show that markets are better than ever before for the average investor.

High frequency traders do not compete with retail investors but rather against each other, competition that average investors benefit from.

In the past decade, costs for retail investors have fallen by as much as $20 per trade, quoted spreads have been nearly cut in half and displayed market depth has tripled.

The rules on the book already police most, if not all, manipulative behavior, but regulators must continue to be vigilant and monitor all market participants, enforce the rules that currently exist, and finally, strengthen market structure to preserve the many benefits technology has brought to the marketplace.

The vast majority of professional traders using high-frequency trading do so legally and ethically, and will be the first to applaud the actions of regulators when truly manipulative behavior is found and removed from the markets.



(The writer is a senior adviser to the Modern Markets Initiative.)

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