LONDON (Reuters) - Sophisticated forms of high-speed share trading have questionable value and may create risks for the market, Britain’s top financial regulator said on Thursday.
“Not all trading activity is equally important,” Financial Services Authority Chairman, Adair Turner, told a hearing on the future of banking.
There was social value to general share trading that allowed investors to buy and sell shares daily, Turner said.
“But to extend that to say there is some great social value to flash trading or algorithmic trading which tries to close out discrepancies in prices ... it’s quite bizarre to believe that has anything other than the most minimal social value,” Turner said.
If such trading creates risks, regulators can be happy “to say goodbye” to that category of activity,” Turner said.
The European Union and U.S. regulators are both studying whether some types of high speed trading give investors with cutting edge technology an unfair edge over the rest of the market.
Reporting by Huw Jones, editing by Mike Peacock