Industry Super Network Calls to Ban High Frequency Trading (HFT)

Submitted by Share Trading on 22 September, 2012 - 17:02

A superannuation advocacy group, Industry Super Network have called on Australian financial regulators to consider banning high frequency trading (HFT) in the Australian stock market.

  • Australian Securities & Investment Commission (ASIC) is currently in consideration of altering rules on equity market structure, which include regulations on automated algorithms and high-frequency trading.
  • Zachary May, head of regulatory policy at ISN, said in a submission to the regulator: "Super funds are custodians of retirement savings and hold significant assets listed on the financial markets. Recent changes in market structure, market practice, and technology have created advantages for a subclass of traders - high frequency traders - who seek to create and exploit an unlevel playing field to earn profits."
  • HFT has been under scrutiny, when in May 6, 2010 the Dow Jones has a "flash crash" and the market fell 1000 points losing $862 billion in 20 minutes.
  • US-based Knight Capital lost $440 million last month when one of its algorithms went rogue.
  • NYSE Euronext was recently penalised NYSE US5 million to resolve U.S. regulatory claims that the New York Stock Exchange violated rules by giving certain customers a head start on trading information.
  • The Full ISN letter to ASIC – on Australian market structure can be found here.
  • The Industry Super Network is an umbrella organisation for the industry super movement. Industry Super Network is part of Industry Super Holdings (ISH), a group of 35 industry super funds. The four main entities in ISH include ME Bank as the banking arm, Industry Funds Management (IFM) for funds management, IFS for financial services and financial planning and ISN for research, policy development and advocacy.