High-frequency trading group hires CEO, retains law firm
NEW YORK Aug 21 (Reuters) - Modern Markets Initiative, a high-frequency trading advocacy group, said on Thursday it selected Bill Harts, an electronic trading veteran, as its chief executive officer, and retained the same law firm that hired former derivatives regulator Bart Chilton.
High-frequency firms account for more than one-half of all trades in the U.S. stock market, and are often referred to as modern-day market makers. Market makers ease the way for investors to trade by stepping in and taking the other sides of many orders and profiting from trading spreads.
But scrutiny around high-speed trading increased following the March 31 publication of "Flash Boys: A Wall Street Revolt," the latest book by best-selling author Michael Lewis. He contends the stock market is rigged in favor of high-frequency traders, who can use their speed advantage to effectively front-run investors.
"There has been a lot of misinformation written and said about high-frequency trading, and the only thing we can do is try to correct people's impressions and talk about the facts," Harts said in an interview. "This is something that is important to every single investor in the country. We're talking about their investments and their savings, and we take that very seriously."
Harts is a former head of electronic trading services for Bank of America Corp Securities and managing director of global program trading for Citigroup Inc. Harts was also an executive vice president at Nasdaq OMX Group Inc.
Several regulators are investigating high-speed automated trading practices, including the U.S. Securities and Exchange Commission, the FBI, the New York state Attorney General, and the Commodity Futures Trading Commission (CFTC), where Chilton was a commissioner.
During his seven years at the CFTC, Chilton frequently spoke out against the influence of speculators and high-frequency traders, who he referred to as "cheetahs," in commodity markets. He joined law firm DLA Piper in April, after leaving the CFTC the previous month.
Modern Markets Initiative currently has four member firms: Global Trading Systems, Hudson River Trading, Quantlab Financial and Tower Research Capital. (Reporting by John McCrank; Editing by Jeffrey Benkoe)