Re: HFT... Below is ASIC's reply in todays AFR 'Letters' section....
Interesting they found 18 instances re: HFT irregularities in 6 months.... Personally as a active day trader I could easily find 18 in a day without looking...
Liquidity is actually being taken out of the market rather than being added... IMO ....
For me, well the way I'm looking forward is to make a transition away from my nearly 20 years as a full time trader on the ASX & more into the futures market (where HFT's also are), but at least my orders sizes are less relevant and are more likely to be filled ......
High frequency trading is no cause for alarm
Patrick Durkin’s article on high frequency trading may have given the impression market integrity is under threat (“ASIC poised to clamp down on HFT’’, AFR , April 7). In reality, existing rules are sufficient to deal with the use of trading technology. More than 99 per cent of all orders are automated.
ASIC’s study into high frequency trading in the Australian markets found no fundamental deterioration of market quality, or systematic abuse that threatens the integrity of our market. Rather, we found the Australian market, which is less fragmented than the US, to be one of high quality and integrity. The report on our study was published last March. On the back of the report, ASIC put in place rules to allow for better fairness of access. ASIC’s new market surveillance system is a further safeguard.
The system is built around algorithmic trading technology, and gives ASIC the ability to analyse trade data for patterns and relationships consistent with the increased use of technology in day-to-day trading.
In addition ASIC has staff dedicated to monitoring trading and we often take pre-emptive action when we are concerned about particular strategies or systems. We recently reported that in the six months to December 30, 2013, there were 18 instances of preemptive actions taken by ASIC in regard to execution strategies, algorithmic trading and filter issues.
ASIC is keeping a close eye on changing conditions, patterns and trends – both here and abroad.
Cathie Armour Australian Securities and Investments Commission Sydney, NSW
