Aug 6, 2012

Time to control the trading machines

Last week a computer glitch at a high-frequency trader in New York caused wild swings at the NYSE. It's a warning to our regulators to clamp down on automated trading, writes Robert Gottliebsen of Business Spectator.

The nasty community implications of the “legalised insider trading” or so called high-frequency trading are becoming better understood in New York, Germany and, to some extent, Australia.

You will remember that high-frequency trading is the scheme where big institutional investors pay stock exchanges large sums so they can have a direct pipe into the trading computer to cream money from smaller players, all in the name of providing the market with liquidity.

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4 thoughts on “Time to control the trading machines

  1. Steve777

    I read the article in Crikey earlier this year and wasn’t sure whether what was being described was a legal form of insider trading, legalised pilfering or a form of high roller gambling. Probably a combination of all three. It is certainly parasitic. It seems to go against the principle of how a stock market should work, with all players having the ability to access all relevant information when making investment or trading decisions. But high volume traders are very much in a privileged position viz a viz genuine investors. And it looks like something that could create significant instability in the system, with potentially disastrous consequences. We need to find a way to control and contain this blight.

  2. Liamj

    Regulation before the crash is not how we do things around here, i can cite many examples, but can anyone cite the opposite, i.e., name -any- human activity that was regulated -before- multiple crashes/deaths/disasters? Wake me when the stockbrokers start jumping.

  3. Mike Flanagan

    While I dont dispute the necessity to regulate and control HFT, I do suggest it is the Banks and Financial major players such as Insurance , Derivative and Furure Traders together with the likes of hedge funds that all need to be reviewed and regulated.
    They all seem to be very enthused at the prospect of accessing the accumulated super funds of the workers.
    Many economists have warned us that churning money does not add wealth to a nation or populace and should not be included in GDP figures.
    The slicing and dicing of morgages and subsequent creation of a pokerhand called a derivatives has proven to be an albatross around the finance industries neck. It hasn’t put much on the dinner tables of millions of home owners in America.
    There is much for our Finance Industry leaders to reflect on, if we are to maintain a so called ‘free market’ system built on a ‘demand and supply’ equations.

  4. izatso?

    yeh, yeh, spivs, moneygrubbers and asstd. facilitators, at light speed, no REGULATION, lots of DISTRACTION……………… with whose moneys…….. ? …… because Greed/Someone Else/Greed.

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