According to the Financial Times, several leading high-frequency trading houses, including DRW, Jump Trading, DV Trading, and Hehmeyer Trading have entered the crypto asset markets last year. Several newly-launched crypto hedge funds are also using algorithmic trading strategies to generate a return on investment for their investors.
Dutch high-frequency trading house, Flow Traders BV, also recently made a move into the crypto markets, according to Bloomberg. The Amsterdam-based company is making markets in exchange-traded notes linked to bitcoin and ether due to strong investor demand for crypto investments.
The consensus is that there will be a major “liquidity crisis” with huge selloffs in major asset classes, and no one to step in to buy. The losses will be exacerbated by the shift to passive management and the rise of algorithmic trading. JP Morgan says that the Fed and other central banks may even need to directly buy stocks, and there could even be negative income taxes. The bank thinks the crisis will hit sometime after the first half of 2019, most likely in 2020.
Thomas Peterffy helped launch the electronic-trading revolution that transformed the US stock market. And while the billionaire hasn’t soured on automation, he’s taking a lead role fighting back against the speediest traders.
Interactive Brokers Group Inc. announced Wednesday that it will list its shares on an exchange run by IEXNSE 0.06 %Group Inc., which was made famous by Michael Lewis in “Flash Boys.” The 2014 book documented the market’s efforts to use a 350-microsecond speed bump to eliminate advantages IEX believed the fastest traders had in US stocks. When shares of Interactive Brokers move over from Nasdaq Inc., it will be IEX’s first win in its delayed plan to list corporations.
A Nomura index that mimics a trend-following strategy by chasing momentum in 10 EM currencies against the dollar has outperformed the JPMorgan Emerging Market Index by nearly 20 percentage points so far this year.