High Frequency Trading Is Positive: Malkiel

In their quest to find trading profits, competition among high-frequency traders also serves to tighten bid-offer spreads, reducing transactions costs for all market participants, both institutional and retail. Rather than harming long-term investors, high-frequency trading reduces spreads, provides price discovery, increases liquidity and makes the market a fairer place to do business.

Technology has dramatically improved the efficiency of our trading markets. Rather than putting the individual investor at a disadvantage, high-frequency trading cuts costs significantly for everyone. Individual investors are the ultimate beneficiaries when their pension funds and mutual funds can transact large volumes of trades anonymously with great speed and at lower cost.

From the Financial Time article, "High-frequency trading is a natural part of market evolution" by Burton Malkiel, December 14 2009.