Forbes – Earlier in the decade, the mutual fund world was rocked by a market-timing scandal. Mutual fund companies allowed certain deep-pocketed hedge funds to trade in and out of their portfolios to take advantage of pricing imbalances caused by markets opening and closing in different time zones, as well as redemptions, fund share sales and other things. The market timing was halted and investigated, with some of the worst actors prosecuted, as it was done at the expense of retail investors.
Now we have “high-frequency trading,” a catch-all term for firms that use computers and algorithms to execute trades in a millionth of a second, seeking gains in fractions of pennies or, at the very least getting the best execution before slower market movers can get an order filled.
