The dangers of massive high frequency trading are becoming increasingly clear in equity markets. Greg Medcraft, the chairman of corporate regulator ASIC, confirmed to a Federal parliamentary committee:
“Regulators around the world are very concerned about the systemic risk on high frequency trading. We have already had the flash crash, we have had Knight Capital, but there have been incidents in other major markets as well.”
His colleague, ASIC deputy commissioner Belinda Gibson, suggested algorithmic and high frequency trading is sometimes manipulative or illegal, but it is often simply predatory on other investors.