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Two year ago a project was begun, sponsored by
HM Treasury and led by the
Government Office for Science under the direction of the
Government's Chief Scientific Adviser (Professor Sir John Beddington) to consider, amongst other things, the effects of high frequency trading on financial markets: see
here. A final report for the project - titled
The Future of Computer Trading in Financial Markets: An International Perspective - was published yesterday: see
here (
pdf). An executive summary is available
here (
pdf). The report notes that high frequency trading may have modestly improved the functioning of markets in some respects but accepts that policymakers are justified in being concerned with the possible effects of high frequency trading on instability in financial markets. Regulatory measures are suggested to address these concerns.
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