(Bloomberg) — The Bank of Russia is now monitoring the nations financial markets to ensure firms using computers to tradeautomatically, a group often referred to as high-frequency traders, arent using unfair practices.
The regulators interest was piqued by an increase in high- frequency trading, which accounts for about half of stock trading at the Moscow Exchange, according to Valeriy Lyakh, the head of the market violations monitoring department at the central bank.
Some high-frequency trading systems may potentially be used for unscrupulous practices in the financial market, Lyakh told reporters in Moscowon Tuesday. Were studying their share of market trading and current strategy. In particular cases we conduct detailed investigations to clarify the situation.
Using cutting-edge technology, high-frequency traders can place orders to buy in sell in tiny fractions of a second, far faster than people can react. While electronic trading has helped drive down costs by making markets more efficient, this speed race has spurred concerns that human traders are now outmatched. Some national regulators have stepped up surveillance and mandated new rules to keep high-frequency traders in check.
The Moscow Exchange, whose largest shareholder is the Bank of Russia, monitors all irregular trading and sends the information to the central bank, the bourse said Tuesday in an e-mail.
Its the regulators prerogative to decide whether it needs to introduce limits on certain trading algorithms, said Andrey Braginskiy, a spokesman at the Moscow Exchange. Theres no single opinion of market participants on this.”
One Russian broker this year asked the exchange to consider introducing limits on certain high-frequency trading practices following a request from several international clients, the bourse said Tuesday. It declined to identify the broker.
The Moscow Exchange has experienced several recent technology breakdowns. The Bank of Russia hasnt found any signs of malfeasance, but it is concerned by the malfunctions, Lyakh said. The bourse on Monday experienced its fourth market failure this month.
