Computer clamp urged over trade spike

CALLS for tighter restrictions on computerised share trading have intensified, as the corporate watchdog investigates whether foul play was involved in this week's dramatic spike in several blue-chip stocks.

CALLS for tighter restrictions on computerised share trading have intensified, as the corporate watchdog investigates whether foul play was involved in this week's dramatic spike in several blue-chip stocks.

Brokers believe a computer program played a key role in Thursday's sudden surge in the share prices of more than eight companies, including ANZ, Commonwealth Bank, AGL, Bank of Queensland, Ansell and Aristocrat.

The spike which also forced up options on the S&P/ASX 200 Index occurred because several buy orders were withdrawn six seconds before trades were about to happen.

The Australian Securities and Investments Commission has launched an investigation into whether market manipulation was behind the spike.

Meanwhile, the Australian Shareholders Association said the incident underlined the need for restrictions on high-frequency trading. Chief executive Vas Kolesnikoff said regardless of whether the spike was a technology problem or something more sinister, it highlighted the threat technology posed to market integrity.

He said some retail investors were already reducing their portfolios due to fears that high-speed traders had an unfair advantage, and called on Financial Services Minister Bill Shorten to intervene.

"He's got to start considering why the market exists, because all this is chipping into everybody's superannuation savings."

A spokesman for Mr Shorten said Treasury and the Australian Prudential Regulation Authority were investigating high-speed trading, and were expected to report on their findings by the end of the year.

ASIC deputy chairman Belinda Gibson said late on Thursday she did not think a high-speed trading algorithm drove the event.

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