Time, trading and algorithms in financial sector security

This article examines the financial security issues raised by the rapid development of high-frequency trading (HFT). HFT involves automated algorithmic trading of financial instruments where the objective is to reduce the time scale between the initiation and execution of trades to microseconds (or even nanoseconds) so as to reap competitive advantage. After outlining the contours of a HFT world, the presentation goes on to discuss some of its important consequences and implications. Several matters are discussed in this context: market manipulation, hacking, index construction and violence. Of particular significance for the notion of financial security is the issue of time as embodied in algorithmic trading. In turn this raises concerns over the regulation and management of this new field of financial innovation and trading activity.