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Despite Risks, Brazil Courts the Millisecond Investor

New York Times

At a time when the mere phrase “high-frequency trading” makes some investors queasy, Brazil’s stock exchange is putting out the digital welcome mat. [...]

Wallace C. Turbeville, a senior fellow at Demos, a research group in New York, said most offers made by high-frequency trading firms were “illusory”: they exist not to be executed, but to measure, distort and exploit market sentiment, increasing volatility and costs for other investors.

Brazilian executives say they believe they have been able to avoid problems through strict regulation. They are also trying to keep at bay many of the other technological developments that have complicated American and European markets. Brazil has, for instance, banned dark pools, private venues where trades can be executed out of the public eye.

And unlike in the United States, which has 13 public stock exchanges, the BM&F Bovespa remains the only place to trade stocks in Brazil.