The regulator heads into its final stage of a study analyzing the impact of high-frequency trading and whether further regulation needs to be implemented.
The issue of High Frequency Trading is making headlines again, as the Investment Industry Regulatory Organization of Canada enters the final stage of a long-term study analyzing the impact of this controversial industry practice.
Let by two North American academic project teams, the study is looking at how high-frequency trading impacts liquidity across markets, risk management, and how information is transmitted to determine “if HFT firms are integrating markets and whether or not their activities are beneficial,” IIROC said. The effects of short-selling by high-frequency traders and other market participants on market liquidity, stability, price efficiency, and price discovery are also being analyzed.
From Jan. 1, 2012 to June 30, 2013, each team had access to secure and “masked” data. The regulator says that since it stepped in last year to control specific HFT strategies viewed as “manipulative and deceptive,” surveillance alerts have been implemented to “actively monitoring to detect these rule violations.”
“This research, combined with IIROC’s ongoing work, will help to inform any further policy making or regulatory interventions,” the regulator told the Financial Post.
The final phase is set to be completed by the end of this year.
High-frequency trading is a subject of controversy, as those for the practice argue that it provides liquidity to markets and lowers trading spreads, while those against the practice says it creates an unfair divide in the buying and selling of securities.
Related Stories:
Getting ahead of the speed trader
The deep end of 'dark pool' trading?
Let by two North American academic project teams, the study is looking at how high-frequency trading impacts liquidity across markets, risk management, and how information is transmitted to determine “if HFT firms are integrating markets and whether or not their activities are beneficial,” IIROC said. The effects of short-selling by high-frequency traders and other market participants on market liquidity, stability, price efficiency, and price discovery are also being analyzed.
From Jan. 1, 2012 to June 30, 2013, each team had access to secure and “masked” data. The regulator says that since it stepped in last year to control specific HFT strategies viewed as “manipulative and deceptive,” surveillance alerts have been implemented to “actively monitoring to detect these rule violations.”
“This research, combined with IIROC’s ongoing work, will help to inform any further policy making or regulatory interventions,” the regulator told the Financial Post.
The final phase is set to be completed by the end of this year.
High-frequency trading is a subject of controversy, as those for the practice argue that it provides liquidity to markets and lowers trading spreads, while those against the practice says it creates an unfair divide in the buying and selling of securities.
Related Stories:
Getting ahead of the speed trader
The deep end of 'dark pool' trading?
