07/06/2011 // Tysons Corner, VA, USA // cstys // Carolyn Stys
High frequency trading news — High Frequency Traders (HFTs) have recently been accelerating their spread across borders and across asset classes in pursuit of trading stocks, commodities, derivatives, debt securities, and currencies simultaneously on increasingly fast, globally interconnected electronic platforms. National regulators have remained focused on preventing another “flash crash” in their own domestic stock markets, but in “borderless” markets, national regulators have fading ability to cope with arbitrage across asset classes and regulatory jurisdictions. Individual investors will be increasingly marginalized, while threat of globalized systemic risk will likely rise.
The just-published article in The International Economy magazine, by Dr Harald Malmgren and Mark Stys, “Computerized Global Trading 24/6, A rollercoaster ride ahead?”, discusses the effect that computerized trading could have on global markets in times of crises like the current European sovereign debt problem. Based on conversations with heads of exchanges, traders, and regulators around the world, the authors conclude that the new ‘inter-connectedness’ of markets and borderless trading could lead to substantially increased volatility and systemic risk. They argue that computer algorithms make and execute trading decisions worldwide at speeds and beyond legal jurisdictions that leave market regulators and exchanges with little ability to control wild market swings that may be generated from time to time.
Founded over twenty years ago, The International Economy is a specialized quarterly magazine covering global financial policy, economic trends, and international trade. The publication is edited for and read by central bankers, politicians, and members of the financial community including professional investment managers, macroeconomic specialists, those interested in high frequency trading and high net-worth global investors.
Dr. Harald Malmgren is an internationally recognized expert on world trade and investment flows who has worked for four US Presidents. From the late 1970s he managed an international consulting business, providing advice to many corporations, banks, investment banks, and asset management institutions, as well as to Finance Ministers and Prime Ministers of many governments on financial markets, trade, and currencies.
Mark Stys is the Chief Investment Officer of Bluemont Capital Advisors, LLC. He was a bond trader with Fidelity Capital Markets where he spent 5 years trading US government debt and eventually became head of Fixed Income and International Strategy.
Social Media Tags:HFT, systemic risk, computerzied trading, Bluemont Capital Advisors, Malmgrem, electronic platforms, high frequency, national stock markets, regulatory jurisdictions, national regulators, borders,
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