IOSCO calls for greater supervision of high frequency trading

24 October 2011

Greater regulation of the latest trading technology developments such as high frequency and algorithmic trading is required to enhance the stability of the financial markets, a regulatory organisation has warned.

A report by the International Organisation of Securities Commissions (IOSCO), which examined the latest innovations impacting markets, called for a consistent approach from global regulators when dealing with these technologies.

Regulators need to ensure appropriate trading controls are in place to deal with volatility in the markets while all participants, whether they are direct venue members or not, must be monitored by these controls.

Masamichi Kono, chairman of IOSCO’s Technical Committee, said: “Markets are evolving rapidly and it is important for regulators not only to monitor developments in technology and market structure, but also to continue to assess the impact of these changes on market integrity and efficiency and to address any risks identified.”

The report is a response to the G20’s request for greater surveillance of these technological changes back in November - the G20 finance ministers and central bank governors have voiced their support for the recommendations made in the latest report.

Further guidance by the IOSCO is expected to be released in mid-2012.

By Jim Ottewill

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