The observed characteristics of the market behaviour paint a two-sided picture of HFTs’ impact in the markets: In normal trading environments, the findings support the view that many HFTs act as a stable source of liquidity that provides investors a steady opportunity to trade future contracts at very good prices.
Since autumn 2008, the ECB has been confronted with various episodes of downside risks to price stability. In the months following the Lehman demise, those risks arose principally from the threat that the liquidity crunch in the interbank market would lead to a disorderly deleveraging of the banking sector, which would have had serious consequences for real activity and price stability.