Yes, let\’s investigate high speed trading

The former City minister said that high-frequency trading also known as black box trading had been a \”contributing factor\” in the harsh swings which have led to more than £300bn being wiped off the value of British shares since the beginning of July.

He wants both the Treasury and the Financial Services Authority (FSA), the City regulator, to investigate thoroughly the phenomenon and the impact it has.

High-frequency trading (HFT), which accounts for as much as 50pc of trading in London, has been blamed for exacerbating intra-day swings

For it would be massively interesting to know the result of such an investigation.

On the one side we have most of the economics profession who say that trading, speculation, reduces price volatility.

On the other we have the usual economic weebles (WDM, nef, the alphabet soup of Teenage Trots) who say that trading, speculation, increases price volatility.

Politically the latter are gaining traction. So, it would indeed be fascinating to have a proper investigation into the whole thing.

My expectation is that the economists will be proven correct in which case we can tell all the weebles arguing that trading must be \”controlled\” to fuck off which would be a nice result.

It\’s such an important point that I\’d even support the spending of taxpayer money to find the correct answer.

3 thoughts on “Yes, let\’s investigate high speed trading”

  1. I don’t know much about the technicalities here, but if it reprersents real trading then its probably ok. If its just some artifical manipulation of the computerised system, then its probably not.

  2. It would also be interesting to know just how much HST is carried out as a means of earning commission without any benefit to the principal, i.e. churning.

  3. It is said that HFT machines cancel 90% of their orders, i.e. are trying to move prices to produce arbitrage opportunities by sending false signals with those cancelled orders (quote stuffing). Is this true?

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