Just sent this letter to ASIC. It reads as follows:
12th April 2010
ASIC Level 24 120 Collins Street Melbourne VIC 3000
Dear Sir or Madam:
Reading about people constantly complaining about ALGO trading, and being aware that many people have written to the ASX and ASIC about this, I want to join them. However, this is not a complaint about Algorithmic trading - it is a complaint about The ASX and ASIC, so I don't wish to be put in the same overflowing basket that those complaints are in. I know that for months on end people have written and complained to ASX and to ASIC, and all they have received is the same old generic letter. I guess when one finds oneself in such a frustrating position it is fair to analyze why this might be.
Firstly, concerning the generic letter: this displays a total apathy towards the problem: This reaction is viewed as:
"Hello, another complaint about Algorithmic trading..... Well, let's send them one of these letters. That will shut them up for a while. And by the time we send them three or four they might just give up (and shut up)...."
Secondly there is an implied conflict of interest ...(Heaven forbid this be the case - but it is possible.) This conflict of interest is perceived by retail shareholders as the ASX being self-regulating in its role as administrator and operator of the Australian Stock Exchange, an administrative role where regulative decisions will impact on its own profitability - and without doubt a self-serving privately owned administration pretending to be working in the name of the Government of this country.
Thirdly, that we have a situation whereby you as ASIC are incapable of doing anything about it and will continue to put in the too hard basket.
I believe this to be the case. I do not believe that the supervising staff of both the ASX and ASIC have the staff with the necessary advanced knowledge of Algorithmic trading to be able to distinguish between right or wrong - i.e. to locate within an Algorithmic trading program "hidden" programs designed to manipulate a Share Price in accord with a pre-determined desired outcome.
I have included an article coming from a Share Trading discussion forum, which indicates that some smart young computer programmer, similar to the one that write viruses and anti-viruses, are the ones that write these algorithmic trading programs. They can have all sorts of hidden agendas in it and so I dont believe ASIC is able to identify, let alone supervise this.
The ASX has allowed something to operate on good faith, and on good faith alone. That is not good enough. If something like the third scenario is correct, I can understand the predicament you are in, but you must realize this is not going away,. People from other counties may take this lying down, but the Australian people are different. We are used to having it right, and want it to continue that way.
The media and the politicians have not got hold of this yet, but I suggest they will crucify you when they do. To think that 50% of trading of the official Australian stock market is operated by system the regulators dont understand themselves will not sit easy with most people.
This is costing retail shareholders dearly every day, people are fed up with this insidious behavior by people that should know better. . We often refer to other counties and the corruption they have, but this new corruption is creeping into Australia in a very subtle way.
We demand you properly fulfill the roles of your employment. We demand you identify and investigate more closely the activities which are the subject of numerous complaints held in your respective investigative databases, and we demand you get this problem under control.
Without proper action taken by you to control this problem, you can have no doubt that action by the public will proceed from this level of contact to Media, Parliamentary and Senate Enquiry levels.
