High frequency trading (HFT) glitches endanger the reputation of stock markets as stable venues for investment. However high speed computerised trading is a technological advance which is here to stay and brings advantages in liquidity and competetiveness of spread prices.
HFT providers have a responsibility to not just rigorously check their algorithms, and their interaction with other market systems, but to also maintain constant surveillance by checking their transaction records before authorising continued operation of their system. It is not the responsibiility of the regulator to do this, but it should be possible for the exchanges to block orders that are out of the ordinary in volume and or price.
Categories: Trading opinion