What does "bad" HFT look like, how often does it happen, and how do we detect it?

Focussing on the Negative Aspects of HFT

In our previous report High Frequency Trading - The Good, The Bad, and The Regulation, we identified and grouped a variety of High Frequency Trading strategies. We concluded that classifying all HFT as "bad" was too broad a generalisation, as we found evidence of strategies that improved market quality alongside those that did not.

We think it is important to highlight liquidity-enhancing strategies such as market making or statistical arbitrage, which seek to correct short term mispricing. However, this report will focus specifically on strategies which seek to create short term mispricing, and how to respond accordingly to this "bad" HFT.

David Fuller's view Forgive me for raising an eyebrow at: "we found evidence of strategies that improved market quality". Really?

I remain concerned about HFT for all the reasons previously mentioned. However, I think we can live with it most of the time and still prosper.