The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A new Bank of Canada study on HFT makes no definitive call on whether the practice is good or bad for markets.
A new Bank of Canada study on HFT makes no definitive call on whether the practice is good or bad for markets.
(iStockphoto)

HFT is good. And bad.

The Bank of Canada has released a research paper on high-frequency trading that, unfortunately for those looking for a silver bullet that finally answers whether HFT is good or bad, provides ammunition for both sides.

The study takes advantage of a very helpful four-year data set from the Alpha alternative trading system, complete with trades and orders time-stamped to the millisecond and markers that identify individual traders. As data sets for HFT studies go, this is good stuff, and the researchers are able to see when individual traders begin to be active on any one stock. They can then compare how those stocks behaved before and after, as well as see stocks that have no HFT to provide control groups.