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High frequency trading and dark pools are the new normal

High frequency and dark pools are the ‘new normal’ says ASIC’s Medcraft | news | Trading & Execution | Regulation | " . . . ASIC carried out an analysis of equity market trading within ASX and Chi-X from January to September 2012, to try and determine the activity and implications of high frequency trading. They also spoke to both industry participants and regulators abroad to try and spot gaps in existing regulations. "On the whole, we found that some of the public perceptions about high-frequency trading in Australia appear to have been overstated, with no evidence of systematic manipulation by high-frequency traders," said Medcraft. . . .With regard to dark pools, ASIC has suggested a new set of rules about order execution, with the aim of giving investors a measure of choice. "These rules will provide sufficient investor protection from the impact of conflicts of interest and poor transparency that may result from excessive dark trading," said Medcraft. "Excessive dark trading can impact the price investors pay for securities. We have proposed a trigger for a minimum dark order size that will provide an additional safety net for investors." In combination with the new price improvement rule, he thinks this will tackle the risks of excessive dark trading and ultimately provide greater capacity for Australian investors to use dark pools."

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