The head of Australia's multibillion-dollar Future Fund says high-frequency traders and computer-based algorithms have made it harder for investors to judge risk.
But fund chairman David Gonski, who has been in the job for 11 months, says investors should accept that they are now part of the financial landscape.
"The existence of new technology I find very exciting and, far from fearing it, I think overall it adds enormously to our lives and to our businesses," he said on Monday.
"However, there are areas of this that make risk more difficult to judge than perhaps previously. The concept of large amounts of trading affected through algorithms and high-frequency trading come to mind," he said.
"This is a question very much of seeking to understand the effect of these so as to render them at worst neutral and at best to seek to optimise the position of one's institution."
Mr Gonski made the comments during a keynote speech to the Australian Securities and Investments Commission's annual forum dinner. It is the first time he has commented on high-speed trading in his capacity as Future Fund chairman.
His comments come after the release last week of ASIC's report on the impact high-speed traders and "dark pools" on local financial markets. The ASIC report, the result of a nine-month investigation into HFTs and dark pools, found fears about high-speed traders had been largely "overstated" despite evidence that some HFTs had used questionable trading strategies.
On Monday, ASIC chairman Greg Medcraft reiterated the view that HFTs were largely benign.
"We found public concerns appear to have been overstated, with no evidence of systematic manipulation by high-frequency traders," he told the ASIC forum.
"In fact, their trading strategies are commonly adopted by the buy-side. However, we will continue to monitor these issues and consider what is a 'safe level' of high-frequency trading."
Mr Gonski, who retired as chairman of the Australian Securities Exchange last March, said investors needed to come to grips with the existence of "dark pools".
"The more that is not done through a substantial clearing house or in an open manner, the more I believe institutions and other investors have to understand what could go wrong in the process of their transaction," he said.
ASIC has suggested sweeping changes to the largely unregulated corner of the market where trading takes place away from the public exchange.
These areas are referred to as dark pools or dark exchanges, reflecting a lack of transparency.
The regulator says the market has little information about the existence, nature and operation of these trading venues.