Letters of the Week

Greek lessons

It was enlightening to read the comments made by D D’Cotta regarding Greece and its shipping industry. Maybe we in Australia can learn from this experience in the light of so many of our industries shifting manufacturing to cheaper markets in Asia while still appearing to be Australian.

Alan’s story on Greece was humorous but it did start to smell of putting in the boot while someone is already down. There is not a shadow of doubt that Greece is down and out right now and that the ordinary people are suffering hardship and will continue to do so for some time. However, the reference to Greece’s default on loans going back to the 4th century BC is as relevant today as discussion on the assets of the Roman Empire. What I do think would be useful would be an objective report on the events of the past decade that may have brought this very catastrophic situation in Greece to a head.

– Y Rae

Super worry

I am disturbed that Bruce Brammall gives credence to the tax-fest submissions from the Association of Superannuation Funds of Australia (ASFA) and the Australian Institute of Superannuation Trustees (AIST). These organisations simply represent suppliers of products to superannuants. About 15 years ago ASFA tried to prevent SMSFs providing pensions to their members and instead force them to take pensions or annuities from providers. These products were always hugely disadvantageous to superannuants silly enough to take them up but profitable to those who sold them. I would oppose without question any proposal that a superannuant be compelled take an annuity from one of these providers and I can't envisage the circumstances in which I would voluntarily acquire one either.

– S Begg

Nano-second trading

The consensus seems to be that nano-second trading will be coming soon to a bourse near you. Apparently the ASX has invested $32 million in an "Australian Liquidity Centre", which will allow investment banks to pay to sit their computers next to the ASX computers in the same room. The banks are worried about not having the same length of cable and thereby being disadvantaged! I would love to hear what you have to say about this and how you think the new Chi-X exchange will affect us.

– P Dickes

Editors response: For those not across the subject matter, high frequency trading is split-second trading automated by a central computer. The trades are based on complicated algorithms designed to identify and take advantage of volatility and arbitrage situations. It’s not hard to find a reason to be suspicious of high-frequency trading; the automation of any task, let alone one that can influence the quality of your retirement, deserves to be thoroughly scrutinised (especially one that is widely believed to have caused the “flash crash” of 2010).

Meanwhile, the arguments in favour of high-frequency trading are remarkably similar to those that support “shorting”, namely that they provide liquidity and price discovery. Alas, in our opinion we expect the industry developing around high-frequency trading to continue growing. Documents obtained by Eureka Report that Chi-X is currently scouring capital cities for state-of-the-art properties with multiple-fibre connections would appear to support this.