(The Trade News) -The Shanghai Stock Exchange’s clampdown on high frequency trading is intended to deter speculation, and not to keep out professional trading firms with a genuine interest in capturing the Chinese market’s opportunities, says Dean Ashley Owen, China chief representative of Newedge Shanghai Representative Office.
Chinese regulators are wary of the potential systemic risks to the economy associated with high frequency trading (HFT), and hence is taking a cautious approach to allowing HFT activity in the stock and futures markets.
“The Chinese regulators need to ensure there are no systematic risks to the economy,” says Owen. “With over 1.3 million futures accounts, of which less than 5% are classified as institutional accounts, the regulators and exchanges need to make sure that retail investors are protected. The fear is that the emergence of sophisticated computer trading will come at the expense of the guy on the street.”
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