Industry Super Network wants high frequency trading ban
The Industry Super Network (ISN) has called for a ban on so-called 'high frequency trading' (HFT), arguing that it and over-the-counter derivatives acted as a catalyst for the global financial crisis.
The ISN's call is contained in a submission to the Australian Securities and Investments Commission in which it argues that the global financial crisis and ongoing financial turmoil have clearly shown that the financial system can affect the ability of super funds to meet the retirement expectations of members.
The ISN's director of regulatory policy, Zachary May, claimed HFT was on the rise in Australia and in other jurisdictions and had been found to exacerbate market crashes and undermine investor confidence in the fairness of markets.
"Super funds are custodians of retirement savings and hold significant assets listed on the financial markets," he said.
"Recent changes in market structure, market practice, and technology have created advantages for a subclass of traders - high frequency traders - who seek to create and exploit an unlevel playing field to earn profits."
May claimed this ultimately came at the expense of long-term investors like super funds.
The ISN submission claims that unlike other jurisdictions where high frequency trading is prevalent, Australia still has time to get ahead of the issue.
May claimed a moratorium would allow technological and market developments to proceed only after the risks had been carefully studied by the regulator, with the market benefits of technology being brought to bear for all investors in the public interest - not just a small subset of traders.
