HFT (High Frequency Trading) Effects on Investors

3. Increased Cost of Doing Business

Developing the algorithms to determine advantageous pricing or compensating outside parties to gain access to information related to trading volume and timing costs a pretty penny. These investments in high frequency trading increase the cost of doing business not only for the traders, but also for the exchanges, the companies looking to go public with an initial public offering, and funds wanting to make trades. The increased costs due to the popularity of high frequency trading lead to less demand and lower participation rates in the exchanges – all which cost investors money.