"We risk becoming the best informed society that has ever died of ignorance"
- Rubén Blades

"You can't make up anything anymore. The world itself is a satire. All you're doing is recording it"
- Art Buchwald

"It's getting exciting now, two and one-half. Think of everything we've accomplished, man. Out these windows, we will view the collapse of financial history. One step closer to economic equilibrium"
- Tyler Durden

"It is your corrupt we claim. It is your evil that will be sought by us. With every breath, we shall hunt them down."
- Boondock Saints

Thursday, October 13, 2011

Reserve Bank of Australia on HFT

Guy Debelle is the Assistant Governor (Financial Markets) at the Reserve Bank of Australia, a position he has held since March 2007. In that role, he has oversight of the Bank's operations in the domestic and global financial markets, including the management of Australia's foreign reserves. He briefs the Reserve Bank Board on developments in financial markets at the monthly Board meetings and participates as the Bank's representative in a number of global fora, including the BIS Committee on Global Financial Stability. 

Mr. Debelle makes a fatal error in my mind.  In the embedded report he likened HFT in financial markets to high frequency systems in a BMW.   These are apples to oranges because BMW isn't gaming the market with "flash pools" enabling them to see my preferences before the rest of the market participants.  So, Guy, the BMW doesn't cause me concern because I know who wrote the High Frequency system.  The problem here is we don't who wrote what system and on top of that our regulators just don't get it

Can you tell me who wrote this one Guy...?
When the BMW fails and crashes, guess who I'll know to go after.  On top of that we have laws to protect me if BMW is being manipulative in their practices.  What do you say when an algorithm creates havoc, drives markets down, causes stale quotes to come through, and even gets to buy assets at prices not offered until milliseconds into the future?

He also talks of low profit....

Guy then goes on to talk about:

Read the report here:

Guy Debelle_High Frequency Trading in FX Mkts