Brake sought on high-speed traders
Banks and brokers are ripping off the taxpayers who bailed many of them out, according to an influential consumer lobby group.
Finance Watch has raised the heat in an increasingly impassioned debate by arguing that ordinary people saving through pension funds or equity-based investments are losing out through the activities of high-frequency traders (HFTs). They use computers to execute huge numbers of trades in short periods of time, and exchanges have spent millions of pounds to upgrade their infrastructure to accommodate them. This is likely to be made clear when the London Stock Exchange reports results at the end of the week.
Benoit Lallemand, senior research analyst at Finance Watch, said: "Many high-frequency firms make huge profits. But if someone is making profits like this, there has to be a loser."
Mr Lallemand said that high-frequency traders are effectively making profits on the back of the man in the street. He added that ordinary investors were losing out twice.
First, they did so because financial markets were focusing on HFTs and their needs at the expense of longer-term investors, who trade less. Second, they were losing out because "indirectly high-frequency traders make profits on slower traditional traders, on pensions and mutual funds".
Mr Lallemand argued that HFTs simply bring volume to markets but provide few other benefits. Finance Watch is lobbying the European Parliament, which has been discussing ways to clamp down on the practice. European law makers are discussing ideas such as imposing a minimum "resting time" during which a trader would have to hold securities.
Finance Watch has sought to reheat the issue after the European Principal Traders Association (Epta) argued that Parliament's move to curb the issue would set markets back seven years. It said clamping down on the practice would make markets less efficient and more volatile.
The Futures & Options Association has also said a minimum resting time would be counterproductive. Mr Lallemand, however, said that the cost of block trades favoured by big investors such as pension funds had risen by 14 per cent since 2009.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...