What Is Systemic Risk?


I attended the 2015 FIX Trading Community EMEA Trading Conference yesterday at Old Billingsgate in London yesterday. You'll hear more from me about all that in due course, because I'm under strict instructions to "quote check" with assorted speakers before pressing the "Publish" button! However I am able to reveal that I bumped into Kevin Houstoun, Chairman of Rapid Addition, at the post conference "cocktail party". Kevin pointed me at his work on the UK Government's Foresight Review on the Future of Computer Trading in Financial Markets. Here's an overview of that project:

We have previously mentioned Professor Dave Cliff's work on the Foresight Review here, and amongst other things Kevin wrote Driver Review DR31 on "Standards in Computer Based Trading", which pointed out that:

There is considerable evidence, mostly drawn from the real economy, of the impact of standards on industrial output…. Standardisation has been shown to contribute some £2.5 billion a year to growth in the UK economy.

Here's another video in which Kevin goes into more detail about some of his own work on the Foresight Review:

Note particularly the bit (around 2:40) where he says:

The debate about high frequency trading has been very, very polarised. You seem to have almost two camps. You seem to have one side who say 'HFT – Good', and you have the other side who say 'HFT – Bad', and that's been the depth, quite often, of the argument.

Note too that the slides from Kevin's presentation can be downloaded from the LSE web site. Finally, for the moment at least, here's another video which is from the recent "Perspectives on Systemic Risk" conference at the London School of Economics and Political Science which poses the question "What is Systemic Risk":

If you would like to investigate the answer to that question in more depth then please take a good long look at the LSE's "Systemic Risk Centre".

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