Greater transparency for HFT technology could cut irregular market activity, finance professionals say

28 July 2010

Greater transparency for processes surrounding high frequency trading technologies (HFT) could help prevent irregular activity on financial markets, a new survey has claimed.

A study by Progress Software Corporation, which questioned 125 finance professionals, revealed that more than 80 per cent believe that increased transparency will help prevent market abuse.

Just over half of those questioned use real-time monitoring technology, the report showed.

Almost two-thirds of respondents said HFT is positive for the market with the most obvious benefits being an increase in liquidity levels and the tightening of spreads.

Dr John Bates, Progress Software's chief technology officer and senior vice-president of corporate development and strategy, said HFT is now “widely accepted”.

“With unprecedented trade volumes and values taking place in just fractions of a second, it is time for the capital markets culture to change with the times and embrace the tools needed to detect and avert risky trades, dangerous market movements and illicit market abuse."

Further findings from the research revealed that 68 per cent of respondents stated that the ‘flash crash’, which occurred on a Dow Jones index earlier in the year, could have been avoided.

On May 6th the Dow Jones Industrial Average dropped by nearly 1,000 points during a 20 minute period.

By Jim Ottewill

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