Has the popularity tide finally turned for low-latency traders?
Are high-frequency traders such bad guys after all?
According to Greg Yanco, the Australian Securities and Investment Commission’s head of markets surveillance, investor fears about HFT are out of date and points out there have always been traders with a speed advantage. In an interview with the Sydney Morning Herald, the Aussie equity market’s top cop added that HFT fears are unfounded.
“There have always been some traders with an advantage and today’s high-frequency traders only might have a millisecond or microsecond advantage,” he was reported as saying.
Yanco also said that regular checks on the Australian Securities Exchange and rival trading venue Chi-X Australia have found no harmful “latency arbitrage” being employed by HFT. In contrast, he said that there is a “tiny” amount, however, between the 20 so-called “dark pools” exchanges run by brokers because their technology varies, and some is slower than two main exchanges.
ASIC is currently conducting a review of HFT and dark pools activity to update research done in 2012.
“We do see the ability to do that between the lit market and the broker dark pools,” the newspaper reported him saying at a local industry conference. “If you get a change on Chi-X or ASX, it will be quickly replicated on each exchange. But broker dark pools technology varies and some are not as fast as ASX and Chi-X, and so we have seen a tiny little bit of this latency arbitrage between the broker dark pools and the lit markets.”