Wednesday, 24 October 2012

UK: the future of computer trading in financial markets

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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