High frequency trading (HFT) of securities has become a high-profile target on both sides of the Atlantic in recent weeks. On September 2, Italy began imposing a tax of 0.02 percent on many order changes and cancellations that occur within 0.5 seconds of the original order. Later that month, the managers of the world’s largest […]
Another year has sped by with more change and economic uncertainty throughout the global markets. From a journalist’s viewpoint, 2010 was filled with some of the most dynamic and complex economic trends and global market events possible. For instance, the Euro zone debt crisis, the global currency war, coverage of the international currency war – announced by Brazilian Finance Minister and precipitated by Ben Bernanke’s quantitative easing monetarist policy – the perils of high-frequency trading, and the burdensome economic impact of two-front warfare on the domestic agenda are just a few issues that led the Global Markets through a year of risk, volatility, turmoil and uncertainty.
Using high-speed, high-frequency programmed trades, Traders in effect bend down to pick up those pennies – often millions lying around in the stock market – then do it again, sometimes thousands of times a second. There is nothing wrong with this activity in, and of itself, however, HFTs have become a matter of financial public policy and regulatory review given a glimpse into its potential harm to efficient Markets. Left un-checked this could become the next big financial disaster waiting to happen.