Global bank regulators seek more risk controls around algo trading

New York

BANKS need to put in place more stringent standards around algorithmic trading to help reduce risks to the financial system as trading becomes more electronic and increasingly complex, a group made up of global regulators said.

Most trading firms are highly automated and use pre-programmed instructions, known as algorithmic trading strategies, to make lightning-fast decisions on which securities to buy and sell, with little human intervention. Banks regularly use algorithmic trading strategies and have high-frequency trading firms as clients.