High frequency traders get an ally

With high frequency trading getting a lot of (mostly negative) attention these days from Washington lawmakers and the media, the Futures Industry Association (FIA) and a coalition of trading firms have formed a group to advocate for the interests of firms trading for their own capital.  The FIA Principal Traders Group (PTG) is a forum for firms trading their own capital to identify and discuss issues confronting the principal traders community. PTG has appointed as its spokesperson industry veteran Jim Overdahl, former chief economist for the SEC and CFTC.

The group will serve as an organized means to respond to inquiries about high frequency trading and also will allow the group of 25 member firms to identify best practices within the industry.

In a conference call today, Overdahl said PTG will address misconceptions about principal traders and stressed the importance of the group in the current environment of increased regulatory proposals. “We want to make sure the information that goes out about the role of these players in the market is accurate and reflects a role that they believe they play in the market in terms of providing liquidity and reducing volatility,” he said.

The FIA released a report recently recommending risk controls for all trading firms to ensure a level playing field in terms of latency.

Also speaking on the conference call, FIA President John Damgard said, "Speculation is now being blamed for everything from the Icelandic volcanoes to the blowing up of the oil wells in the Gulf. The truth is, the high frequency traders create the liquidity so people coming to the market have buyers on the other side. Absent their presence in the markets, we’d see much wider spreads.” "There's strength in numbers," he added.

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