JPMorgan: “only about 10 per cent of US equity trading is now done by traditional investors.”
JANUARY 9, 2019
… HFTs dominate the market-making once done by humans in trading pits and the bowels of investment banks. Various quant strategies — ranging from simple ones packaged into passive funds to pricey, complex hedge funds — manage at least $1.5tn, according to Morgan Stanley. JPMorgan estimates that only about 10 per cent of US equity trading is now done by traditional investors. Other markets remain more human, yet are slowly but surely being transformed.
That markets are undergoing a dramatic , algorithmic evolution is an inescapable fact. Although some humbled hedge fund managers may unfairly castigate “algos” for their own failings, there are real risks in how some of these different factors can interact at times of market stress.
HFTs are far more efficient market-makers than human pit traders. Yet the entire sector probably has less capital than just one of the major banks, says Charles Himmelberg, head of global markets research at Goldman Sachs. It means that they tend to adjust their bids aggressively when market mayhem breaks out.