High-frequency trading spreads across energy markets

High-frequency trading (HFT) is playing an ever-larger role in energy markets, but is it really suited to the nuanced deal sheets of commodities? Stephen Maloney considers this and asks whether HFT is in fact quietly tilting the table to favour those with the technological advantage

The current market environment – increasingly insolvent governments and greater correlation among asset classes – is characterised by high systemic risk, making hedging difficult and speculative opportunities fleeting. Such trends increase leverage and heighten sensitivity to central bank policies, especially those affecting currency pairings. Energy assets, with their dollar denomination and international flows, are directly affected.

In these markets, any competitive advantage is highly sought