Swap regulations hold key to future of OTC algorithmic trading

The arrival of central limit order books in the interest rate swap market has opened the door to algorithmic trading – but only a little. Its future depends on how the over-the-counter market evolves. By Peter Madigan


The growth of algorithmic and high-frequency trading (HFT) in the past decade has been accompanied by a rising tide of anger and fear, which reached its high-water mark in the months following the so-called flash crash in US equity markets on May 6, 2010. In theory, algorithms provide greater efficiency to end-users, by linking fragmented trading venues, bolstering liquidity and delivering better prices. In practice, critics claim that when the algos are deployed by HFT firms, the opposite is

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