HFT's high-profile defender

Citadel Investment Group founder Kenneth Griffin on July 8 urged Congress not to ban high-frequency trading, but to focus on regulations that would improve market stability, according to FINalternatives.

Speaking at a Senate Banking Committee hearing, Griffin, whose firm does some high-frequency trading, albeit less than in previous years, said that Congress should “absolutely not” ban the practice. He called the U.S. equity markets “the fairest, most transparent, resilient and competitive” in the world, and said that HFT helps reduce market inefficiencies.

“Somebody has to keep the New York markets in line with the markets in Chicago,” he said. With HFT, “it all happens at an extremely low cost in the context of our capital markets.”

Griffin told the senators that he supports “thoughtful regulation,” noting in particular the need for more attention to dark pools. The hedge fund chief said such “alternative trading systems” need to be monitored to ensure that all investors are treated equally.

Griffin also called for increased disclosure from broker-dealers, which he said “need to have solid and robust fail-safes.”

“We need to have broker-dealers and exchanges work hand in hand to prevent aberrant orders from having an undue and unfortunate—in fact, devastating—impact on investor confidence.”

During the hearing, Sen. Mark Kirk (R-Ill.), who opposes additional HFT regulation, asked Griffin if author Michael Lewis had spoken to him about the subject. Lewis’ book, Flash Boys, has fueled much of the recent debate on HFT; Lewis has said it has “rigged” the U.S. markets.

“I’ve never spoken to Michael Lewis,” Griffin said. “He never called you?” Kirk pressed. “He did not,” Griffin responded.

About the Author

FINalternatives is the premier, independent source for news on the alternative investment industry. The seasoned reporters at FINalternatives bring readers the latest news and information from the hedge fund, private equity and CTA communities—bringing clarity to this opaque corner of the investment universe.

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