Treasury to study high frequency trading amid worries of a crash

THE TREASURY has commissioned a study into high frequency trading amid concerns that computer-generated errors can play havoc with the economy.

The department will sponsor an investigation into the practice, to be led by Lucas Pedace in the Government Office for Science, the Financial Times reports today.

It will look into how computer trading impacts on the integrity, stability and efficiency of financial markets. The Treasury has expressed concern over “flash crashes”, after a computer glitch wiped 1,000 points from the Dow Jones in May.

The study comes as the EU readies its own report on the use of computer trading, as part of the review of the Markets in Financial Instruments Directive.