Regulators in Asia have tightened the screws on trades popular among hedge funds as stocks slumped — an attempt to stabilize markets that some worry may end up stifling key strategies.
Thailand’s plan to increase scrutiny on high-frequency trades — in effect from Monday — follows steps from China, where programmed trading will soon be subject to real-time monitoring. While authorities expect the moves to enhance transparency, the growing control over certain trades has raised concern that liquidity may tighten and make those markets overall less attractive.
"The current trend of regulators tightening the regulation of high frequency trading is somewhat understandable but also worrying,” said Gary Dugan, chief executive officer of the Global CIO Office. "The activity of the HFT funds also brings liquidity to the markets — better liquidity should lead to the improvement in the efficient pricing of assets.”