Even the Angmohs are crying foul!
Finally the angmohs also cannot take it anymore and are crying foul. High frequency trading is no angel. And for all the goods they claimed to bring, they are really hogwash. High frequency trading is causing more harm and bringing nothing good to the stock markets around the world. They are the destroyers of stock markets and values of stocks. Many markets are appearing healthy with good volumes but in reality fictitious. Don’t believe anyone claiming that volumes are increasing because of high speed trading. It is a lie.
Kent Rossiter, head of regional Asia Pacific trading at RCM said, ‘You can look at the trading volumes and see it does a million shares a day. In reality, of the million shares you’re seeing, there’s not really a million shares out there for you to take, there’s probably 600k or 700k.’ I think he is too conservative. For a million trades done, very likely 80% are done by high frequency trading without any change of ownership, and creating a false market.
High speed trading doesn’t help liquidity: Fund Managers. This is the heading in an article in the ST today. The Bloomberg article said, ‘The benefits of high frequency trading in Asia are illusory and the strategies drive up costs, according to regional trading heads from JP Morgan Chase, Allianz Global Investors and Fidelity Worldwide Investment.’ It also reported that ‘the govts of HongKong, Singapore and Australia are considering the extent to which high frequency trading and other electronic strategies should be regulated’. They should not be regulated. They should be banned from any stock market.
The false claims that high frequency trading will provide liquidity, facilitate trades, market maker, and reducing cost are all bull. How could Asian govts be conned by such superficial claims when the damage of high frequency tradings have been the ire in US and Europe? The only clever govt is Singapore. In the last SGX AGM, when questioned, the management replied that they have not allowed high speed trading into the exchange. Thank God that this is true. I believe they are telling the truth.
High speed trading is violating all the rules and by laws of any stock exchange. It is unfair trading, cheating to be plain, when they are allowed to plug their computers into stock exchange system to monitor other trades and allowing their computers to initiate the best buy or sell to make a profit. As such they have emptied the pockets of many innocent traders and investors, including the funds and their clients.
Among the violations of high frequency trading are, churning, buying and selling with no change in ownership, cornering stocks or the market, creating a false market and unfair trading. No responsible stock market must allow such violations of their rules and by laws to go on, or they are simply accomplices to a crime.
The state of stock markets in the world is so bad that many are looking good superficially but are really in the intensive care wards. Like what George Yeo said, anything may look perfect on the outside, but don’t be deceived.
Govts across the world must not be deceived by high speed traders. They are not innocent and naïve little kids that brought their expensive computers to help a stock exchange to be market makers, to generate liquidity. The truth, they are out there to mop up everything in the market by unfair means. Responsible govts must stop the carnage caused by high speed trading and save their stock markets.