Wary of over-reach, Australia mulls HFT regs


As one of two nations that avoided much of the damage of the 2008 credit crisis - Canada was the other - Australian financial regulators are set to release a study on regulating the country's financial industry with a focus on high-frequency trading.

So far, there are calls for a "measured response."

In a Bloomberg interview, the chairman of the Australian Securities and Investments Commission admitted that "there's no silver bullet."

Greg Medcraft, chairman of the Australian Securities and Investments Commission, added, "You don't ban it, you manage it and create the right risk framework around it. We want to have a measured response."

The forthcoming report, set for release on March 18th, is based on the findings of two task-forces that examined the impact of HFT and dark pools in the Australian equity markets. This follows a trend of various national regulators and politicians calling attention to the risks of high-speed trading and unlit trading.

Bloomberg reports that, "Australia, Hong Kong and Singapore are considering the extent to which trading strategies that rely on speedy placement of bids and offers should be regulated amid concern that they can be used to manipulate prices. Germany was the first developed market to legislate on the practice, which can profit from tiny price discrepancies."

In these days of global trading and the hunger for dark trading venues, a CIO and his staff must be ready for the possibility of longer, slower dealing.

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