Trading in picoseconds is pure madness

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• Oct 26 2015 at 9:26 AM 
  

High Frequency traders shift to futures markets

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[img=620x0]http://www.afr.com/content/dam/images/g/k/i/8/s/g/image.related.afrArticleLead.620x350.gki8pq.png/1445813141218.jpg[/img]High Frequency trading is shifting from the cash equities market to the Futures exchanges, according to ASIC's latest review. Tim Boyle
by Jonathan Shapiro
High frequency traders had become more sophisticated and aggressive and had increased gross revenues while trading more "mid-tier" securities.
A report released on Monday, by the Australian Securities and Investment Commission estimates that high frequency trading firms earned revenues of between $110 million and $180 million in the 12 months to March 2015, a "material" cost of around one basis point to users. 

The report said that the use of dark pools had remained constant accounting for about 25 to 30 per cent of all activity – but was diverting back to its original intention – for large block trades.
While ASIC said that most of the initial concerns about dark pools had abated it was still worried that some exchange users had sought to preference some users over others and harboured doubts about how conflicts of interest between clients and in-house trading units were managed.
SHIFT TO FUTURES MARKETS

High frequency traders are moving more trading to bond and equity futures markets according to the latest report.
ASIC figures show that the level of HFT in equity markets remained steady at 27 per cent of turnover but trading in futures markets had more than doubled since December 2013 with HFT accounting for 14 per cent of turnover in the SPI equity futures market and 14 per cent in bond futures.
ASIC said that while these levels were not currently concerning, it would continue to monitor their developments.
The ASIC review into high speed trading and "dark liquidity" where trading takes place away from the public exchanges said that financial market users were adapting to markets populated by machine traders.


The report concludes that their rise was not "adversely affecting the function of Australian markets for businesses and investors".