High frequency trading needs tighter regulation, says Chilton
Bart Chilton, commissioner at the Commodity Futures Trading Commission, has called for better regulation of high frequency trading and warned that the discipline’s reputation may have been diminished by the actions of some “cyber cowboys”.
In an opinion piece for the Financial Times on September 7, Chilton trod a middle path between the industry participants who claim that HFT is a purely benign influence on markets, and fiercer critics who have called for a strict clampdown.
Chilton concluded that without the influence of HFT the price swings in the May 6 ‘flash crash’ would not have been so volatile, and he could not rule out the possibility that some HFT players had tried to profit from the dislocation.
“There is a good argument to be made that ‘parasitical trading’ does not truly contribute...