Industry Super Network (ISN) has called for the Australian Securities and Investments Commission (ASIC) to implement a moratorium of high frequency trading (HFT), claiming that the practice is damaging to long-term investors, including super funds.


ISN’s Director of Regulatory Policy, Zachary May, said that HFT is on the rise in Australia, and has already been proven to exacerbate market crashes in other countries.


“Super funds are custodians of retirement savings and hold significant assets listed on the financial markets. Recent changes in market structure, market practices, and technology have created advantages for a subclass of traders – high frequency traders – who seek to create and exploit an un-level playing field to earn profits. Ultimately, this can come at the expense of long-term investors like super funds,” Mr May said.


Mr May likened high frequency traders to a shadowy cabal, saying that trading firms that pay kickbacks have grown influential and are at risk of becoming a dominant force in the market.


“Unlike other jurisdictions where high frequency trading is prevalent, Australia still has time to get ahead of this issue. A moratorium would allow technological and market developments to proceed only after the risks have been carefully studied by ASIC,” Mr May concluded.