Hi all,
I found an interesting article with statistics on HFT in the ASX.
So all you people who hate bots and the 1 share trade at the end of the day it doesn't appear that there is any light at the end of the tunnel soon. The Company ASX is making too much money out of it.
High-frequency trading is 'legalised scalping'
Bell Potter's Charlie Aitken has been a longstanding critic of high-frequency trading.
High profile Bell Potter trader Charlie Aitken has labelled high-frequency trading "legalised scalping" and warns that the national stock exchange is headed for trouble because it profits from allowing investors to gain faster access to the equity market to the disadvantage of other participants.
The author of the privately circulated Ringing the Bell report said most investors he spoke to believed that the growth of HFT had made the equity market a "rigged casino" and trading volumes were lower as a result.
"This is all a question of market integrity," he said in a morning note to clients. "If private investors believe the market is rigged against them, and in one aspect they are right because they are executing at slower speeds than others, then you can't blame them for not wanting to participate."
His comments came a week after a storm of arguments erupted over high-speed trading in the US, following the release of the book Flash Boys by best selling author Michael Lewis. The book claims HFT is the reason Wall Street is rigged.
Australian financial markets are considered safer and more tightly regulated when it comes to HFT, which accounts for about a third of all trading activity, compared with more than double that in the US.
It is widely agreed that HFT is an issue only when the technology is used by traders who deliberately program their super-fast computer systems to take advantage of client orders and force them to usually pay more or suffer a loss.
Mr Aitken, who has been an outspoken critic of HFT for some time, moved to promote Bell Potter as a broker that will hopefully be "rewarded" for its long-term stance against HFT.
He reaffirmed his "sell" recommendation on shares in the Australian Securities Exchange, which he said was playing a role in facilitating and profiting from allowing HFT to operate in the public market and in its dark pools away from the exchange and at cheaper cost.
"Pretty much everyone else who played a role in HFT has a problem," he said. "From the ASX down to individual broking firms, you can sense that a major regulatory response is pending and that will be followed by a major 'ambulance chaser' response."
He said he saw the potential for shareholder class actions seeking back the "scalped" profits. "It's a classic class action: mums and dads were ripped off."
Mr Aitken added that "The ASX analysts who currently think HFT being abolished or severely restricted and it has no effect on ASX earnings are simply wrong. On our work ASX earnings would drop -10 per cent and I would also think the P/E [price to earnings ratio] would drop 2 points alongside that negative EPS [earnings per share] revision to reflect regulatory risk and limited growth options."
Mr Aitken cited the following in his note about the ASX when it comes to HFT:
¦ 27 per cent of turnover based on value is attributed to HFT.
¦ 32 per cent of all trades on the lit market are HFT.
¦ 44 per cent of all orders entered are HFT.
¦ 47 per cent of all amended orders are HFT.
¦ The top 10 high-frequency traders account for 60 per cent of HFT turnover.
¦ Top 20 account for 80 per cent of HFT turnover.
¦ 10 per cent of HFT orders exist for between 10 and 100 milliseconds
¦ 40 per cent of HFT orders exist for 1 second or less.
¦ 65 per cent of HFT is intraday turnover that is flat at day's end.
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