Collection

Future of computer trading

Foresight project exploring how computer generated trading in financial markets will change between now and 2022.

Advances in technology are transforming how our financial markets operate. The volume of financial products traded through computer automated trading taking place at high speed and with little human involvement has increased dramatically in the past few years.

Today, over one-third of UK equity trading volume is generated through high frequency automated computer trading while in the US this figure is closer to three-quarters.

This project examined the technological advances which have transformed market structures in recent years and explored how computer trading will evolve over the next 10 years.

Sir John Beddington talks about the new Foresight report on the future of computer trading

View more videos on the project.

The project involved 150 leading experts from more than 20 countries to provide the best possible analysis on computer trading to date. Over 50 driver reviews, working papers, economic impact assessments and surveys informed the final report.

It was guided by a high level stakeholder group and a lead group of experts to provide strategic oversight of the project and ensure that it used the most relevant evidence and research.

The project was sponsored by HM Treasury.

Project report

Working papers

Driver reviews

  1. Computer trading: UK equity market - the last 10 years
  2. Computer trading: feedback effects and changes in trading strategies
  3. Computer trading: technology trends
  4. Computer trading: global financial markets
  5. Computer trading: liquidity and trading costs
  6. Computer trading: an ecological perspective
  7. Computer trading: crashes and high frequency trading
  8. Computer trading: automated analysis of news
  9. Computer trading: leverage, forced asset sales, and market stability
  10. Computer trading: information and profits
  11. Computer trading: impersonal efficiency and the dangers of a fully automated securities exchange
  12. Computer trading: price efficiency
  13. Computer trading: interactions between human traders and algorithmic trading systems
  14. Computer trading: large scale financial systems simulation
  15. Computer trading: impact of special relativity on securities regulation
  16. Computer trading: market structure
  17. Computer trading: evolution of algorithmic classes
  18. Computer trading: pricing liquidity in electronic markets
  19. Computer trading: market fragmentation in Europe
  20. Computer trading: market abuse
  21. Computer trading: execution costs of institutional investors
  22. Computer trading: end of day manipulation
  23. Computer trading: changes in firms' equity capital
  24. Computer trading: impact on market integrity
  25. Computer trading: 'robot phase transition' in experimental human algorithmic markets
  26. Computer trading: systemic risk - a nuclear perspective
  27. Computer trading: quantifying instabilities and risks
  28. Computer trading: impact on market efficiency and integrity
  29. Computer trading: systemic risk
  30. Computer trading: trust and reputation in financial services
  31. Computer trading: standards

Economic impact assessments

  1. Computer trading: minimum quote life and maximum order message-to-trade ratio
  2. Computer trading: minimum resting times and transaction-to-order ratios
  3. Computer trading: minimum resting times vs call markets and circuit breakers
  4. Computer trading: stock market circuit breakers
  5. Computer trading: tick size regulation
  6. Computer trading: tick size regulation - costs, benefits and risks
  7. Computer trading: minimum obligations of market makers
  8. Computer trading: impact of circuit breakers on market outcomes
  9. Computer trading: impact of internalisation on the quality of displayed liquidity
  10. Computer trading: continuous market vs randomised stop auctions and alternative priority rules
  11. Computer trading: maker taker pricing and high frequency trading
  12. Computer trading: a central limit order book for European stocks
  13. Computer trading: regulatory scrutiny of algorithmic trading systems
  14. Computer trading: market abuse and surveillance
  15. Computer trading: order to trade ratios and the Italian stock market
  16. Computer trading: market making obligations and algorithmic trading systems
  17. Computer trading: harmonized circuit breakers
  18. Computer trading: economic impact of MiFID rules on high frequency trading
  19. Computer trading: economic impact of MiFID II proposals on computer trading

Interviews and surveys

  1. Computer trading: interviews with computer-based traders
  2. Computer trading: investors' views

Workshop reports

Scenarios

  1. Future of computer trading in financial markets: scenarios

Announcements

Published 23 October 2012