April 09, 2012

High-frequency trading has leveled the playing field for all market participants and is merely the next step in the evolution of how assets are traded, DRW Trading founder Don Wilson said in an interview with CME Group's Open Markets magazine.

Meanwhile the shift from a floor-based trading world to an electronic marketplace has been traumatic for a large number of participants, and those who've succeeded are the ones most comfortable taking risks and providing meaningful liquidity, Wilson told Open Markets.

"What you saw was that the market participants who were comfortable taking risk, and providing liquidity made the transition successfully," Wilson told the magazine. "It's created a whole new set of opportunities. But certain inefficiencies that existed in the Eurodollar futures pit are just no longer there."

He also told the CME publication that the concept of high-frequency trading isn't a new one. Trades have always occurred at high speeds, but computers have transformed how they're executed.

"One of the things that I remind people is that when I stood in the Eurodollar options pit on a busy day I would do so many trades that I couldn't even write them down on the trading cards fast enough," Wilson told the magazine. "Of course, the high-frequency trading people talk about now are trades that are generated by computers. But to me it's not a new thing. Frankly I am somewhat confused about it. To me, applying computers to that problem is just a natural evolution of the marketplace."

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced ...