Who trades HFT?
The answer could be summarized in one word: everyone. From the buy side to the sell side, ECNs, and even the inter-dealer and inter-broker-dealer markets, they all use HFT. HFT is dominated by proprietary trading businesses and covers a wide range of products, including stocks, derivatives, index funds, Exchange-Traded Funds (ETFs), currencies, and fixed-income instruments. Proprietary trading businesses accounted for half of the current HFT players, multi-service broker-dealer proprietary trading desks accounted for less than half, and hedge funds accounted for the rest. Proprietary trading businesses such as KCG Holdings (created by the merger of Getco and Knight Capital) and the trading desks of major banks are among the major players in the field. There are some new types of venues (such as Dealerweb's OTR Exchange and IEX) that are looking to provide venues where dealers on the sell side feel safe to execute trades and HFTs are providing liquidity.
It is worth saying that HFTs have become major players in the market. They are also capturing retail flow. Citadel is controlling a large part of the retail flow.
