NEW YORK, Sept 28 U.S. financial regulators have
called on experts in high frequency trading to discuss the risks
technology poses to stock markets following the latest in a
series of trading errors blamed on computer glitches.
The U.S. Securities and Exchange Commission on Friday
published a list of computer specialists and scientists mostly
tied to big Wall Street firms who will give presentations at the
roundtable next week on technology issues in the U.S. stock
The SEC scheduled the Tuesday discussion after a wayward
trading event on Aug. 1, when a software glitch led stock market
maker Knight Capital Group into an erroneous buying frenzy.
Knight's activity moved markets and nearly brought down the
firm, ultimately costing it $440 million.
Technological problems have also been blamed for events like
the May 6, 2010 flash crash and the botched initial public
offerings of Facebook and the BATS Exchange.
While high frequency trading is not the only computer-driven
trading in the marketplace, it is where the most time and
resources go to developing the latest technologies. High
frequency traders are often blamed for large movements in the
market because they operate so quickly, and often trade at high
The roundtable's first panel will deal with preventing
errors in trading, while its second will focus on responding to
market crises once they occur.
"It is common for the majority of participants on these
panels to be pro-HFT, mostly because they understand the market
structure better than anyone," said Dennis Dick, a trader at
Bright Trading in Detroit and a cofounder of Premarket Info.
"It is hard to find market structure wizards that aren't
involved in HFT."
High frequency trading is carried out by powerful computers,
with trades completed at speeds more than twice as fast as the
blink of a human eye. High frequency trading firms spend tens or
even hundreds of millions of dollars on technology, and their
activities have recently drawn criticism from other stock market
participants, who say they hold unfair advantages in the
The panel discussion will bring together representatives
from the high frequency shop GETCO, UBS, the trading services
firm ITG, and the exchanges BATS, NASDAQ, the New York Stock
Exchange and Direct Edge.
The most notable critic of high frequency trading who made
the list is Dave Lauer, a consultant on market structure and
high frequency trading from Better Markets.
Academics from Massachusetts Institute of Technology and
Bentley University will also appear as panelists.