Vince Cable expected to launch crackdown on computer ‘black box’ trading

A CRACKDOWN on so-called “black box” trading is expected to be proposed by the UK government to prevent extreme swings in the share prices of British companies.

Business Secretary Vince Cable is expected to call for better management and oversight of high-speed computer trading in response to a report due to be published today.

Professor Sir John Beddington’s report, The Future of ­Computer Trading in Financial Markets, is set to reveal there are regulatory holes surrounding electronic financial trading and will recommend these loopholes are closed to protect ­markets and investors.

“Black box”, or high frequency, trading – developed in recent years due to technological advances – has been blamed for high volatility in equity prices. It was said to have wiped about £300 billion off the value of UK shares last summer.

More than one-third of UK equity trading is now generated through high frequency trading, while in the United States it is closer to three-quarters.

Beddington, the UK government’s chief scientific adviser, has been leading the inquiry into the impact of high-speed trading on markets, heading a panel including former London Stock Exchange chief executive Dame Clara Furse and Andy Haldane, director of financial stability at the Bank of England.

The UK government was not available for comment.