RTC dinner on High Frequency Trading (24 May 2011)

Debate on High-Frequency Trading: A Formula for Liquidity or a Recipe for Meltdown?

High-Frequency Trading (HFT) is the nuclear energy of the finance industry. The smartest bankers on the planet have armed themselves with bleeding-edge technologies from ultra-high-performance computers to ultra-low-latency networks to exotic things they find lying around at CERN. Not only has financial regulation come under stress from their activities, but even the physical limitation of the speed of light is bitterly lamented for the problems it causes (or praised by innovators for the opportunities it creates).

HFT allows fortunes to be made or lost in minutes, and the Flash Crash last year bounced the US stock market so hard that the solution was to turn the financial markets off and on again to make the problem go away. But without HFT markets might not function as efficiently, and if taken away from the UK would cost many jobs. So have we signed a Faustian bargain for our financial souls, or are opponents of modern trading Luddites who long for a time when gentlemen brokers passed pieces of paper around Edwardian coffee houses?

Con Keating

Con Keating is Head of Research for the BrightonRock insurance group, a member of the steering committee of the financial econometrics research centre at the University of Warwick, and a member of the Société Universitaire Européene de Recherche en Finance. In a career spanning more than forty years, Con has worked as an infrastructure project financier, corporate advisor, investment manager and research analyst in Europe, Asia and the United States. As a research fellow of the Finance Development Centre he published widely on the regulation of financial institutions and pension systems, and also developed new statistical tools for the analysis of financial data. From 1994 to 2001, he was chairman of the committee on methods and measures of the European Federation of Financial Analysts Societies and currently is a member of their Market Structure Commission. Con has also served as an advisor and consultant to the OECD’s private pensions committee and a number of other international institutions. He has served on the boards of a number of educational and charitable foundations and as a trustee of several pension schemes. Of particular interest to Real Time Club members, Con’s first job in 1969 was as a systems analyst (and programmer) at Hambros Bank.

Dave Cliff

Dave Cliff is Professor of Computer Science at the University of Bristol. In 2001, he published the first results showing that computers could automate not only the trading process, but also the process of designing and/or fine-tuning trading algorithms and market mechanisms within which traders interact. Following an article on his work in The Economist in November 2002, he spent two years working with HP to develop his research into real applications for tier-one financial institutions. In 2005, Dave moved to Deutsche Bank’s FX trading floor in London, then co-founded Syritta Algorithmics Ltd, a trading technology development and consultancy firm, and later served as Professor of Computer Science at the University of Southampton. Dave is author/co-author on over 70 academic journal or conference publications, inventor/co-inventor on 15 patents and numerous further patent applications currently under review. He has given well over 100 invited keynote lectures and seminars, he and his work have frequently been featured both in the press and on TV and radio, and his work has been the topic of articles in New Scientist, Financial Times and The Economist. Dave currently serves on the committee of the UK government Foresight Project whose role is to evaluate HFT and how it may be best regulated.