High frequency trading concerns a beat up, but ASIC concerned by dark liquidity: Midday roundup

An Australian Securities and Investments Commission investigation has revealed public concerns about high frequency trading have been overstated, with trading frequency instead attributable to the increasing use of trading technology by investors generally.

ASIC found trading strategies are commonly adopted by many other algorithmic traders and institutions and there was no systematic manipulation or abuse of markets.

Investigations also revealed potential breaches of Market Integrity Rules and the Corporations Act in regard to dark trading (trading activity not openly available to the public).

While high frequency traders seem to be off the hook, ASIC is making some suggestions to moderate the activity because it can create ‘noise’ in the financial market through small orders and trades.

Trend in personal finance commitments rising

New lending finance data reveals Australian’s personal finance commitments rose 0.4% in January, up marginally from December, in trend terms.

But seasonally adjusted, the Australian Bureau of Statistics report on lending finance revealed the value of total personal finance commitments actually fell 0.1%.

The report also indicated the total value of owner-occupied housing commitments, excluding alterations and additions, remained flat in trend terms, while the seasonally adjusted series rose 1.3%.

Total lease finance commitments were reported to have risen by 14.0%, seasonally adjusted, after a fall of 15.2% in December 2012.

Shares drop on open

Australian shares fell on open following concerns about the bailout of Cyprus and losses on Wall Street.

At 11.30am the S&P/ASX 200 benchmark was down 68.8 points to 5051.4. On Friday night the Dow Jones Industrial Average closed 25.03 points lower at 14514.11.

All major industries were down with the exception of telecommunication services, which was up 5.5 points to 1,550.6.