In a new report, the New York Federal Reserve says that high frequency trading (HFT) has “enhanced market efficiency” in the foreign exchange markets. Measurable arbitrage opportunities decreased as HFT was popularized “Data (from the study) is certainly consistent with a view that the rise in algorithmic and High Frequency Trading enhanced market efficiency as measured by the availability and persistence of pricing arbitrage opportunities available in the FX spot market,” wrote the report’s author, Ernst Schaumburg, a research officer in the New York Fed’s Research and Statistics Group. Schaumburg noted that little research has been done on the FX markets,…
High Frequency Trading Enhances Market Efficiency In FX, Says NY Fed
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.