Modern Market Making Provides Safe Liquidity Or Intercepting Liquidity?

The practice of market making has evolved significantly from human math machines operating in a trading pit to intelligent computers operating at speeds too fast for human cognition to respond. Today’s electronic marketplace is more about “immediacy” than at any point in history, as computers now interact with computers. This new dynamic has improved market efficiency, a new report from Tabb Group claims, aiming to bust what it says are four common myths in today’s high-frequency race for speed that has become the market making landscape. High frequency trading analyst Haim Bodek, on the other hand, points to a different type of high frequency trading that is directional in nature, takes "natural liquidity" from investors trades with micro-second market...