The Super Industry Thinks HFT Is Costing Regular Investors $1.5 Billion A Year

Getty / Patrick Smith

There are wildly varying estimates of what computer-driven high-speed trades are worth in the market but a new estimate by the Industry Super Network says the trades are costing ordinary investors $1.5 billion a year.

The figure is an “opportunity cost” released by the representative body for some of Australia’s largest superannuation funds, which is lobbying for changes to market rules to protect investors from high-speed trades, which now make up around a quarter of all the trades on the Australian market.

Zachary May, head of policy at the Industry Super Network, told the AFR that the market catering for speed rather than capital allocation was giving high-speed traders a leg up. “There is no disclosure of ­high-frequency traders’ profits and no transparency about who is behind the trades in the market,” May said.

The $1.5 billion estimate of the potential cost to ordinary traders is seen as a huge over-estimation by ASIC’s head of markets, Greg Yanco.

“Although we think these numbers are overstated we will continue to ­vigilantly monitor the market,” Yanco said.

More at the Fin.

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