Abstract
This minor dissertation explores the highly technical world of algorithmic and high frequency trading. It provides a brief overview of the key concepts, benefits and market concerns surrounding these technologies. The dissertation looks at the multitude of challenges faced in attempting to regulate and investigate high frequency trading. Further, the current Financial Markets Act is evaluated to determine the extent of its effectiveness, in light of these new technologies. The dissertation then looks at the regulatory developments made in the European Union and determines whether South African regulation should follow suit. It finds that the perceived benefits of high frequency trading do not adequately outweigh the detrimental effects that these systems could cause. The Financial Markets Act is wholly insufficient in dealing with the new risks posed by these systems and it is therefore recommended that urgent regulatory changes are implemented. With so much investment being made in developing technology, innovative regulation has not been equally developed. It is concluded that without the implementation of better regulation, South African financial markets regulation will remain too slow to keep up with rapidly advancing financial markets.
LL.M. (Banking law)