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Could High-Frequency Trading Cause Another Flash Crash? Not Likely, Says Edgar Perez

There have been a number of reports about the next flash crash and how much worse than the one that happened in May 6, 2010 could be. Although the Securities and Exchange Commission (SEC) has taken some steps to prevent another flash crash, apparently caused by high-frequency trading (HFT), some experts question whether the additional disclosure and "circuit-breakers" designed to prevent big, sudden price moves will make a difference. What these reports seem to miss is that high-frequency trading didn't cause the flash crash of May 6, 2010, says Edgar Perez, Adjunct Professor at the Polytechnic Institute of New York University and presenter at The Speed Traders Workshop 2012 Sao Paulo: How High Frequency Traders Leverage Profitable Strategies to Find Alpha in Equities, Options, Futures and FX. He goes onto saying that on September 30, 2010, the SEC and the CFTC issued a joint report that explained in detail how this sudden drop in the value of a number of stocks of well-known companies started, and how this led to a recovery in mere 20 minutes. In this regard, Perez says, the report clearly pinpointed the trade by a mutual fund that triggered the selloff and absolved high-frequency trading from causing it. While high-frequency trading continues being in the spotlight every time there is a sudden decrease (or increase) in individual stock prices, any serious research would find that behind these moves there is a long-term investor either selling (or buying) a disproportionate amount of shares, which in turn, cause a disproportionate reaction by other markets players, including high-frequency traders, Perez explained.

Perez is widely regarded as the preeminent speaker and networker in the specialized area of high-frequency trading. He has been featured on CNBC Cash Flow (with Oriel Morrison), CNBC Squawk Box (with Geoff Cutmore), BNN Business Day (with Kim Parlee), TheStreet.com (with Gregg Greenberg), Channel NewsAsia Asia Business Tonight and Cents & Sensibilities (with Lin Xue Ling), NHK World, iMoney Hong Kong, Hedge Fund Brief, The Wall Street Journal, The New York Times, Dallas Morning News, Los Angeles Times, TODAY Online, Oriental Daily News and Business Times. He has been engaged as speaker at Harvard Business School's Venture Capital & Private Equity Conference, High-Frequency Trading Leaders Forum 2011 (New York, Chicago, Hong Kong, Sao Paulo, Singapore), CFA Singapore, Hong Kong Securities Institute, Courant Institute of Mathematical Sciences at New York University (New York), Global Growth Markets Forum (London), Technical Analysis Society (Singapore), TradeTech Asia (Singapore), FIXGlobal Face2Face (Seoul), and 2nd Private Equity Convention Russia, CIS & Eurasia (London), among other global forums.

The Speed Traders Workshop 2012 Sao Paulo will reveal how high-frequency trading players are succeeding in the global markets and driving the development of algorithmic trading at breakneck speeds from the U.S. and Europe to India, Singapore and Brazil. The Speed Traders Workshop 2012 Sao Paulo kicks off a series of presentations in the world's most important financial centers: Seoul, South Korea, March 28; Kuala Lumpur, Malaysia, April 11; Doha, Qatar, April 18; Warsaw, Poland, May 11; Kiev, Ukraine, May 18; Singapore, May 26; Shanghai, China, June 6; Jakarta, Indonesia, June 13; Mexico City, Mexico, July 27; Hong Kong, August 4, and Moscow, Russia, August 10. Flash Crash