A top U.S. regulator said his agency plans to widen day-to-day monitoring of the commodities and futures markets, targeting the high-speed trading firms that are a growing force, as reported The Wall Street Journal.
Instead of just policing completed futures trades, the Commodity Futures Trading Commission will seek to watch the fleeting buy and sell orders that increasingly influence the market, CFTC Chairman Gary Gensler said in an interview.
The move follows a Securities and Exchange Commission plan to sharpen oversight of stock trades following the 2010 “flash crash.” Regulators are seeking to catch up with high-frequency trading firms that are responsible for roughly half of orders, the vast majority of which are never executed. The SEC is probing the close relationship between high-frequency trading firms and the computerized exchanges they do business with.
Regulators are ramping up oversight of high-frequency trading, which some fear could disrupt or distort financial markets with aggressive, rapid-fire trading strategies. Some more traditional institutional trading firms worry that uncompleted orders are sometimes used to manipulate markets by making it appear there is more interest in buying or selling a contract than there is in reality.