High-frequency trading: how great is the need for speed?

Just how important is speed? Risk managers and traders are weighing the value of high-frequency market data and trading technologies against their costs. Gallagher Polyn examines the debate over using high-frequency data in risk models, and profiles one leading high-frequency trading firm, BNP Cooper Neff

The growing availability of tick-by-tick market data from a variety of liquid markets has prompted one influential economist to preach the virtues of incorporating high-frequency data into risk systems to improve their performance. But risk managers at banks are unconvinced; they say there is no benefit in this approach.

Does it really add value? Is it really worth the investment? Why haven’t people made a billion dollars with it yet? Last month’s audience at the Irving Fisher Committee

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