Robots hit Swedish blue chip stocks

Automated high frequency trading is having an increasing effect on the trading direction of some of Sweden’s biggest blue chip stocks, according to data published today.

Business daily Dagens Industri said that companies such as SEB, Volvo, Ericsson, SSAB, and even Sweden-listed shares in Finland’s Nokia were being hit by the activity, which now accounts for as much trade on the local stock market as the big four domestic banks.

For example, US-based Getco has accounted for 7% of all trades in telecoms firm Ericsson’s shares this year.

Another, Citadel, has accounted for 6% of all trades in Swedish bank SEB.
And almost 9% of Nokia share trades are because of the activity of Timber Hill. Together these three firms alone account for almost 1.5 million trades since the start of 2012 alone, according to the data obtained by the newspaper. It also writes that Citigroup has rented one of IBM’s fastest supercomputers called Watson – named after former IBM chairman Thomas Watson – for its ability to engage in crunching of large sets of numbers.

Last month the Swedish financial regulator, Finansinspektionen, concluded that the increased level of high frequency trading (HFT), or algorythmically based trading, did not per se lead to market abuse. Fears had been raised through 2011 by among others long only managers who complained that HFT was undermining their ability to price shares in funds.

EC Internal Market Commissioner Michel Barnier last year raised HFT in the context of finalising MiFID II rules, which includes proposals for introducing tougher oversight of market abuse across the single market.

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