By Herbert Lash
NEW YORK, June 22 (Reuters) – U.S. security regulators have billed a panel they host on Tuesday as a talk about liquidity, yet really at issue are the fading ideals of long-term investing and the brave new world of rapid, automated trading.
The Securities and Exchange Commission has brought together some of the biggest practitioners of “high frequency trading” — Tradebot Systems and Jump Trading LLC — and a flag bearer of deep value investing, Southeastern Asset Management Inc.
The title of the discussion, a “perspective on liquidity,” is apt considering the SEC and the Commodity Futures Trading Commission have identified a breakdown in liquidity as one of the likely causes of the still unexplained May 6 flash crash.
Yet for many in the market, in particular investors known as the buy side, more is at stake than arguing over whether automated trading has made markets more efficient and reduced trading costs, a view that the fast traders tout.
How high-frequency trading, which now dominates U.S. equity markets and is spreading to other asset classes, will impact investing should be more thoroughly explored, they say.