LONDON (Reuters UK) - Speculators using computer-based high frequency trading to buy and sell shares could damage companies, the BBC quoted the financial services ministers as saying.
With high-frequency trading, banks, hedge funds and proprietary shops use sophisticated algorithms to earn profit from market imbalances and tiny arbitrage spreads. Critics say the practice harms smaller or long-term investors.
"The fact that people can own shares for nano-seconds seems completely divorced from the concept of a joint stock company and distributed share ownership," Paul Myners told BBC Radio 4.
"The danger is that nobody really seems to think of themselves as owners," Myners said. "It has gone too far, it has now lost its supporting function for the provision of capital to business and has become a game to be played."
Under pressure from politicians and investors, the U.S. Securities and Exchange Commission is looking into ultra-fast trading. SEC chairman Mary Shapiro said last month there was "a lot of concern" about it.
High frequency traders have their biggest hold in the United States, where about 70 percent of volume in U.S. equity markets was from high-frequency trades, according to a report by Rosenblatt Securities.
The report said high frequency trading accounted for 35 percent of European equity trading, a figure that was rising fast.
(Reporting by Catherine Bosley; Editing by Dan Lalor))
