Supervision Of High Frequency Trading In China’s Futures Market

The use of high frequency technology is expanding all over the world gradually,it’s not just a kind of technology,it’s related to people’s production and living closely in nowadays.Actually high frequency technology in the financial market can have the effect which allows tens of thousands of operations per unit time,to make the trading strategy of quantitative investment available.It can provide liquidity,reduce costs to make our market more effective.If this technology can’t be used in a reasonable way,it may cause illegal cases in China’s stock index futures market.China’s futures market had some illegal cases in 2015,one of them is the"Eastern Case".This company is founded in September 2012,it makes two billion yuan in three years with 6.8 million yuan which is the initial amount of investment capital.One important reason to enhance our supervision system in both financial market and futures market is that everything has two ways.High frequency trading reduces the costs and provides the efficient liquidity in markets,but it’s also a new challenge for every investor,the distance between individual investors and institutional investor is widing.Although this distance is a normal thing in all financial markets,not just the stock index futures market in China,some criminals have using this technology to make illegal money from individual investors in here,so supervision system needs to protect and guard all legal investors.The reform of the financial regulatory system in China has a long progress,different stages have different key points,if supervision system can’t handle illegal matters,it will have the similar cases like "the Eastern" to destroy China’s financial markets.We need to protect our supervision system in advance just at the beginning time of high frequency trading technology in China.We can improve the system and find solutions to deal with this problem.High frequency technology is a combination of computer programs and financial trading overall,so why it caused bad effect illegal cases in China in recent years?The most important reason is that the illegal profit which high frequency technology users made is taken from other legal investors,it made a serious chaos in the our market.Long-term investor plays a big role in China’s futures market,we need to perfect futures supervision system,especially to deal with the high frequency trading,to protect them,it’s a necessary trend.High frequency trading may cause market manipulation in China,so in this paper we list shortcomings in supervision system and provide relevant solutions to them.