A report from Germany's central bank, the Bundesbank, studied data from Bund and DAX futures markets
These are the two most liquid German investment instruments in which HFT makes up a significant portion of trading activity
The BUBA divided high-frequency firms into two broad types:
- those that trade actively on news
- those that act as market-makers
The first type were particularly active during periods of high market volatility, and therefore contributed to that volatility
While the second group tended to withdraw from markets during periods of high market stress, i.e. not making markets when needed the most
(Sounds to me like the BUBA is confusing a market maker with a charitable institution, but so be it)
The Wall Street Journal and Bloomberg both have more,
- Journal might be gated: German Bundesbank: High-Frequency Trading Can Worsen 'Flash Crashes'
- Bloomberg: Bundesbank Says High-Frequency Trading Can Enhance Volatility