Home

What can be done to slow high-frequency trading?

Printer-friendly versionPDF version

Would it be possible to impose a speed limit on high-frequency trading? That is the question currently hovering in the air, after Mary Schapiro, chairman of the Securities and Exchange Commission, warned this week in New York that the SEC is planning new controls following the May 6 “flash crash”.

But as the debate intensifies about hyper-fast equity trades, investors and policymakers would do well to remember another point. As a fascinating paper from Andy Haldane, an official at the Bank of England* points, what makes the flash crash interesting is that it was not an isolated incident: on the contrary, it epitomises, in an extreme form, a bigger problem of speed in modern finance.

The key issue at stake, Mr Haldane argues, lies not so much with computer models, but issues of human behaviour. More specifically, he points out, neurological research suggests that the human brain has two contradictory instincts: part of it is hard-wired to chase instant gratification; however, another part of our brain also has the ability to be “patient”, and delay immediate gratification for future gains.

Read the whole article at Financial Times: http://www.ft.com/cms/s/0/d72966fa-bc2d-11df-8c02-00144feab49a.html

Be inspired, read Creditplumber: http://twitter.com/creditplumber

High Frequency Trading topics at Asymptotix.eu:

  • The Quants Control The Markets and May Cause Another Crash in ...

    26 Aug 2010 ... High Frequency Traders alone are responsible for 56% of stock trading volume according to Larry Tabb, founder of TABB Group, ...
    www.asymptotix.eu/.../quants-control-markets-and-may-cause-another-crash-stock-prices
  • Greece, Goldman Sachs, Dow drop, weapons of mass financial ...

    8 May 2010 ... Markets can be rigged with computers using high-frequency trading programs (HFT), which now compose 70% of market trading; and Goldman Sachs ...
    www.asymptotix.eu/.../greece-goldman-sachs-dow-drop-weapons-mass-financial-destruction-computerized-front-running
  • Financial Markets Banking Regulation and Supervision's blog ...

    Sir John Vickers, former head of the Office of Fair Trading and a consumer .... financial destruction & computerized front running high-frequency programs ...
    www.asymptotix.eu/blog/18?page=1
  • Greece Debt Crisis: Greek tragedy or a PIGS tale? | Asymptotix

    For instance, is a high degree of liquidity always desirable? .... mass financial destruction & computerized front running high-frequency programs ..... Portugal was trading at 157bp as recently as April 13 and hit 315bp on April 27 as ...
    www.asymptotix.eu/content/greece-debt-crisis-greek-tragedy-or-pigs-tale
  • Financial Markets Banking Regulation and Supervision's blog ...

    "Clearly trading losses have been larger than what the bank first said", Nordea Markets ... destruction & computerized front running high-frequency programs ...
    www.asymptotix.eu/.../revision-bâle-ii-directive-gets-green-light-european-parliament-cad4-arrives?...
  • Short URL
    Asymptotix on Twitter

    Are the key legislative pillars such as Basel II & III, UCITS IV and Solvency II forcing you to re-examine how you identify, measure and manage risk and capital?

    Asymptotix work closely with our partners to help clients develop a more proactive, systematic and integrated approach to governance and risk management to deliver proper value.

    Asymptotix can offer the support you need to deliver on time. Read more...
     

    Is the goal of your website to sell services or products, educate, or collect data?

    A positive customer experience is vital to conversion, no matter what your conversion goals may be. Our designers and developers will create a positive experience to maximize your conversions and deliver the optimal return on your investment. We strive to find the perfect balance between the web site’s design and functionality.

    Asymptotix implements interactive solutions for European companies. From corporate websites to social communities, our clients will tell you an investment in building a scalable online experience will deliver long-term tangible benefits.

    Based in Luxembourg we can help you all over Europe. Our multi-lingual team can work with projects and speak your language! Read more...