High-speed traders, short sellers face growing Asia crackdown
Thailand’s plan to increase scrutiny on high-frequency trades — in effect from Monday — follows steps from China, where programmed trading will soon be subject to real-time monitoring. While authorities expect the moves to enhance transparency, the growing control over certain trades has raised concern that liquidity may tighten and make those markets overall less attractive.
“The current trend of regulators tightening the regulation of high frequency trading is somewhat understandable but also worrying,” said Gary Dugan, chief executive officer of the Global CIO Office. “The activity of the HFT funds also brings liquidity to the markets – better liquidity should lead to the improvement in the efficient pricing of assets.”
The controversial nature of such restrictions is on full display in South Korea, where a short-selling ban hurt its attempts to win an upgrade from MSCI Inc. These developments show the difficulties policymakers have in keeping up with increasingly sophisticated trading strategies and their impact on financial markets, a challenge that’s only set to grow with the adoption of artificial intelligence.
The restrictions, typically introduced when stock markets were under pressure, have managed to stop the bleeding but their longer-term impact is under debate given the growth of computer-aided trading.
Quantitative strategies are based off data science and systematic techniques, with some using big data to time markets, follow trends or execute arbitrage trades.
China’s clampdown on quant
