Mention ‘high frequency trading’ to a share market investor and watch their reaction. More than likely you will receive a very passionate response. Whether that response is positive or negative will depend largely on which side of the fence the investor happens to be on.
In this topic we take a high level look at HFT. We look at what it is, who is doing it, the size of HFT in the Australian market and ASIC’s regulatory focus.
- Define what high frequency trading (HFT) is and articulate the reasons for its use in equity markets
- Describe the role that technology has played in shaping the financial markets, particularly the speed at which HFT takes place, and the challenges these developments present for regulators and investors
- Outline the key characteristics of HFT and who the high-frequency trader community comprises
- Estimate the volume of HFT in the Australian market and identify the venues where HFT takes place
- Evaluate the reasons why ASIC has taken a regulatory interest in the activities of high-frequency traders
- Summarise the benefits and negatives of HFT to the market and to investors.
- Discuss the purported reasons behind the 2010 Flash Crash and its impact on investors
- Explain what is meant by dark liquidity, dark venues, and dark pools and their link to HFT
- Analyse why HFT is a highly topical and controversial issue that can inspire polarising opinions among investors.
Looking for a RG146 CPD solution? This course also forms part of our complete online CPD solution, , which enables financial participants and organisations to meet ASICs RG 146 ongoing training requirements.