The Great Debate UK

Who’s to blame for market glitches?


–Tanuja Randery is the CEO of trading services firm MarketPrizm. The opinions expressed are her own.–

A recent spate of high profile trading glitches at NASDAQ, Goldman Sachs and China-based brokerage Everbright, have once again put the spotlight on electronic trading technology and in particular, high frequency trading (HFT), which uses complex algorithms to analyze multiple markets and execute orders based on market conditions.

Since its inception, electronic trading has raised transparency, lowered costs, ensured a better audit trail and dramatically expanded global trading levels.  However, as trading gets faster and faster, the pressure to keep up with quickly moving market needs can lead to using technology before the right controls or audits are in place.

Over the last several months, regulators have been proposing measures to rein in HFT.  In July, the Business, Innovation and Skills Select Committee of MPs released a statement urging the government to assess the potential impact and feasibility of implementing a financial transaction tax (FTT) on high frequency trading.