High-Frequency Trading is just Automating the Routine Tasks that Traders have been Performing for Decades, Says Infinium’s Aaron Lebovitz
For Aaron Lebovitz, one of the leading high-frequency traders featured in Edgar Perez’s The Speed Traders: An Insider’s Look at the New High-Frequency Trading Phenomenon That is Transforming the Investing World, high-frequency trading is just automating the routine tasks that traders have been performing for decades. He adds that there is a misconception that high-frequency trading is about making money at the expense of end users. “In fact, high-frequency trading is about innovating with technology to reduce market frictions. When Walmart figured out how to use technology to improve logistics and reduce costs, who benefitted? The consumer. Who didn’t benefit? Sears, K-Mart, the other stores that were trying do the same thing but with a higher cost structure. The analogy is not perfect, but you get the point.”
Mr. Lebovitz built the Algorithmic and Event Driven Trading department at Infinium Capital Management, a proprietary capital management firm with offices in Chicago, New York and London, into an exceptional force in the industry. Infinium was founded in Chicago in 2001 and built by a core team with decades of experience in trading, software development, and financial modeling. As most high-frequency trading firms, Infinium has no outside investors and only manages its own money. Infinium has a long history of partnering with exchanges to launch new products, increase participation in existing products and solve technology issues.
Mr. Lebovitz concludes: “The facts are that our industry has historically been secretive about its activities, for various reasons. Some of this has to do with safeguarding intellectual property, but it also has to do with the creative destruction that this technological revolution has catalyzed. Some very established, very powerful industry players saw high-frequency trading as a threat to their distribution channels, or to their trading desks’ ability to get paid for providing liquidity. That created a disincentive for high-frequency traders to advertise their presence. Now, it has become quite clear that there is a lack of information out there regarding the activities and contributions of high-frequency traders, which has in turn led to some misinformation filling the gaps. As practitioners, we have a responsibility to change that.”