While
high-frequency trading benefits most market participants, there are
also hazards involved.
The presumption is that high-frequency traders
are more efficient, at the expense of the less adept. Individuals who
feel they cannot compete with mutual funds or other large investors, are
just one example of those who view the subject negatively.
If
profits are made on tiny price variations, unscrupulous players can
profit in some manipulation, like that caused by rumors. However, the
SEC has the ability to supervise this possibility.
The
SEC should protect small investors from active traders who could
conceivably be hurt by high-frequency trading with their faster
computers. At the same time, high-frequency trading benefits small
investors who use mutual funds.
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