A new report by Abel/Noser shows fears of high-frequency trading are overblown. Only 184 stocks out of 13,000 issues traded in May were subject to super-fast trading. The agency brokerage defines stocks subject to high-frequency trading as those that trade at least once per second.
“With ‘nanoseconds’ and ‘latency’ being the buzz words, it may lead people to believe that thousands of stocks are trading at the speed of light all day every day,” Bill Conlin, Abel/Noser’s chief executive, said, “which is simply not the case.”
Of those 184 names, the largest—the SPDR S&P 500 Index Trust, or SPY—traded six times per second and the second largest three times per second. “Given that less than 2 percent of U.S. equities are even subject to high-frequency trading, the investor community should focus more on efficient and cost-effective trade execution instead of low-latency,” Conlin added.
Abel/Noser’s monthly liquidity report found that, in May, about 13,000 equity issues were traded in the U.S., including exchange-traded funds and individual company stocks. The ten most liquid names made up 19 percent of all dollars traded. The twenty-three most liquid stocks traded 25 percent of the average daily dollars in the US market. The 143 most liquid names represented 50 percent of all equity dollars traded. The 523 most liquid stocks account for 75 percent of all dollars traded in US equity markets.
