High frequency ‘cheetahs’ may become ‘endangered’, warns CFTC member

6 October 2011

High frequency “cheetahs” may become an “endangered species” if there is another global market meltdown, a member of the Commodity Futures Trading Commission (CFTC) has said.

Bart Chilton, a CFTC representative, made the comments as part of a speech calling for high frequency traders (HFT) to be registered with regulators to increase market stability.

In a speech to the Golden Networking High-Frequency Trading Leaders Forum 2011, Mr Chilton said more monitoring of high frequency traders, or “cheetahs” as Mr Chilton dubbed them, “because they are so fast, fast, fast”, needs to be implemented.

He said: “The good news is that some regulatory safeguards have been put in place. Namely, we now have circuit breakers on many security products. The bad news is that with trading at such warp speeds, we still can't rule out another major Flash Crash.”

Mr Chilton stated that he has sent a memo to his colleagues urging them to agree to the introduction of a registration process for HFT at some stage in 2012.

Speculation over the role of HFT in the flash crash of May 2010 has been rife throughout the financial services industry.

In his address, the CFTC member said that the “cheetahs” did not instigate the crash, which saw the Dow Jones index lose 1,000 points before recovering.

However, they “seem like a likely place to examine for potential issues” if another such incident was to take place.

By Jim Ottewill

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development