High speed electronic stock exchanges around the world face a possible data meltdown, as trading volumes grow exponentially with computers doing most of the selling and buying.
The grim prediction comes as regulators voice concerns about the exponential growth of data, with 61 percent of share trading reportedly now computerised.
Mark van Rugt, head of sales at electronic trading technology firm RealTime Systems, told the Financial Times: “If a position is blowing up so fast without the exchange or clearing firm able to react or reverse positions, the firm itself could be in danger as well.”
It was “absolutely possible to bring an exchange to breaking point”, according to Frederic Ponzo, managing partner at consultancy GreySpark Partners, speaking to the newspaper. A disaster could take place, he said, through algorithmic messages being sent at “such a rate the exchange can’t cope”.
A 'technological arms race', as traders and stock exchanges spend millions of pounds on microsecond messaging, is increasingly being blamed for driving the data explosion.