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Opinion
Noah Smith

Slow Your Judgments on Fast Trading

High-frequency trading may be problematic, but it's best not to draw any hasty conclusions. 
Does hyperfast trading do any harm....or good?                                                   
Does hyperfast trading do any harm....or good?                                                   

In a recent pair of articles (part I, part II), hedge-fund magnate Cliff Asness defended high-frequency trading against most of the attacks that have been leveled against it. Asness is known for his strong opinions. And while I'm generally on his side in this case, a careful reading of his articles shows that he may have overstated his case and we shouldn't be so quick to conclude that HFT is completely benign.

A lot of people claim that HFT is legalized front running, allowing traders to improperly buy or sell ahead of customers. Asness defends HFT from this claim by narrowing the definition of front running; he insists that if you don't trade on information that was entrusted to you, you aren't really front running: