HFT: Ban bad driving, not cars reducing the damage of disruptive high frequency trading to FX

In the race for speed, disruptive high frequency trading (HFT) behaviour and an arms race for the fastest market data threatens to cause more reputational damage to financial markets – but ban bad driving, not the cars argues Daniel Marcus.

First Published: e-Forex Magazine 57 / Leader / July, 2014

Disruptive high frequency trading behaviour has been a major concern for financial markets since the ‘Flash Crash’ of 2010. Almost four years to the day, regulators continue to debate various methods to monitor and regulate high frequency trading. Some, albeit a small minority, have called for an outright ban, while Germany’s financial regulator, BaFin, announced plans to introduce legislation designed to curb high frequency trading – a first for a global regulator.More recently, New York State Attorney General Eric Schneiderman launched a probe into whether high-frequency traders have an unfair advantage, while Michael Lewis’ book is adding to the fire by alleging, amongst other things, that financial markets are ‘rigged’.Addressing the core issue All of the above are bold statements that have generated extensive headlines but fail to address the core issue. High frequency and algorithmic trading is not bad in itself, and it is unfair to paint all those who practice...continued

Exclusive Content

The full article is only available to current subscribers. Click here to sign in or subscribe by clicking here