Tag Archives: BBC News

“The Sexiest Girl in the Class”

While US and European politicians talk about how to curb it, trading based on algorithms is not going away. In fact, it is spreading faster than ever, as emerging markets like Brazil, India , Russia and China, are now catching on to its potential. Ordinary traders are being replaced by coordinators of algorithms. But that’s just half the story.

“If you have the fastest network, you’re the sexiest girl in the class, you’re the top boy. It’s as simple as that.”

Fraser Bell

As pointed out in earlier post; there is a very clear parallel here to what happened between 2000 and 2005 with the rapid build-up of the more or less unknown market of financial derivatives. Only this time it’s more technical…

In the financial centres of Europe and the US, where the practice began, the people responsible for policing the markets are getting worried about their ability to cope.

But while they talk about how to curb it, trading based on algorithms is not going away. In fact, it is spreading faster than ever, as emerging markets catch on to its potential, BBC News reports.

“The Bric (Brazil, Russia, India and China) countries are where it’s at right now,” says Dr John Bates, executive vice-president and chief technology officer of Progress Software, a company that has pioneered new techniques in what are known as quantitative trading programs.

“We’ve seen it grow very quickly in Brazil. It’s done what happened in London and New York much more quickly. Now we’re seeing the same trend in India and China and even, embryonically, in Russia.”

According to Dr Bates, in the past two to three years, Brazil has already run through a cycle of development that took far longer in London and New York, with algorithm-based trading now available in equities, futures and foreign exchange markets.

Brazil’s Bovespa stock exchange has invested in new technology, boosting the proportion of algorithm-based equity trades from 4% to 12% in the past year.

“The adaptation is faster and they can leapfrog the mistakes that have been made in other places,” he says.

Dr Bates says India is already following suit and will see even more automated trade in the next few years: “The market’s gone very electronic there.”

Indian analysts reckon that as many as a quarter of all trades in the country now involve algorithms, still mainly in equities, whereas up to half of all transactions in Europe and nearly two-thirds of US transactions are estimated to come from high-frequency and algorithmic trading.

Taxing, Limits and Supervision

France is the first of the worlds major economies to impose special taxes on High-frequency Trading (HFT).

And according to head of France’s AMF watchdog, Jean-Pierre Jouyet, the French are also considering speed limits and some kind of supervision.

As Dr. Bates told the Asian Financial Forum in Hong Kong in January:

“As there is a rush towards reducing transaction time in the name of high-frequency trading, the question we need to ask is what purpose are we serving by reducing trading time to eight microseconds or even two microseconds. Is this justified?”.

Well, I guess that depends on who you ask?

The Sexiest Girl

It is kinda obvious that the financial industry would not be upgrading its technology by 90 billion dollar this year  if they didn’t think it was worth it.

“If you have the fastest network, you’re the sexiest girl in the class, you’re the top boy,” says Fraser Bell, managing director of BSO Network Solutions. “It’s as simple as that.”

BSO operates its own international network covering the UK, the US and 16 other countries, including the main European financial markets, Hong Kong, Singapore, Brazil and Russia.

It prides itself on being able to send data from London to Hong Kong and back in just 174 milliseconds.

“There’s a massive global drive for speed,” says Mr Bell, who sees himself as locked in a “race to zero” with rival network operators.

Read the full article at BBC News here.

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Filed under International Econnomic Politics, Laws and Regulations, National Economic Politics, Technology

Greek Police Clash With Drivers Amid Crippling Strike

Greek police have fired tear gas to disperse hundreds of lorry drivers protesting in Athens. The drivers are refusing to obey an emergency government order for them to end a crippling strike. Bottles were hurled outside the transport ministry as drivers tried to climb the gates and get inside.

“The mood is Athens is very angry.”

Malcolm Brabant

The strike, now in its fourth day, has paralyzed Greece, depriving petrol stations of fuel and prompting tourists to cancel holidays. The BBC‘s Malcolm Brabant in Athens says the drivers are very angry, demanding compensation for reforms that aim to liberalize the freight sector.

The drivers argue that new license charges are unfair – well below the start-up fees of up to 300,000 euros (£250,000) that existing operators had to pay.

BBC’s correspondent says police are supposed to hand out papers to the drivers telling them that their lorries are being requisitioned. But many drivers have abandoned their lorries so the papers cannot be served.

There are queues outside the few garages that are still open, and shortages of supplies mean some workers are being laid off at factories.

State of Emergency

The Greek government has used a rare emergency order to force the lorry drivers back to work. The measure is usually reserved for times of war or natural disaster.

The government wants to open the freight sector to more competition as part of austerity measures agreed with the IMF and the EU.

The back-to-work order was issued hours after negotiations between the government and the drivers broke down.

Tourist Industry Taking A Hit

The country’s tourism industry says it is suffering from the strike, with bookings down and many cancellations.

An Athens resident called Christina told the BBC that her husband “usually travels to work by car but there is no petrol now.”

“He has to leave the car at home and get the metro across town and then a taxi to his office. It is costing us an extra 20 euros a day.”

“We are due to leave for a holiday on Saturday. We are going to one of the Greek islands here. My baby boy can only drink fresh milk as he has a problem with his digestion. I have been told that there are no deliveries reaching the islands now so I am very worried.”

BBC Reports:

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Filed under International Econnomic Politics, National Economic Politics