Sloppy Algorithms Raise Ire of Australian ASIC Regulators

As reported by CFTC Law’s Elan Mendel, the Australian Securities and Investments Commission (“ASIC”) released a market report this week which included comments on “problematic algorithms” used in high-frequency trading software. Unlike U.S. CFTC Commissioner Bart Chilton, who has been very vocal about his distrust of the “cheetah” traders that take advantage of this software, the ASIC is suspicious of the programs themselves.

Greg Yanoc, ASIC’s head of market supervision explained that “…it’s more about badly written or poorly written algorithms that cause spikes in the market or may cause a cascading effect.” The worry is that a program will malfunction, sending the market into a “flash crash” similar to the one seen in New York last year.

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