Rising transaction volumes could cripple trading systems

Inefficiencies in trade settling need to be addressed by policy-makers, to avoid serious capacity problems in the equity markets.

Sometimes business growth can manifest itself in bottlenecks. As more pension money is poured into the US securities market under the 401-k pension model, Alan Greenspan, chairman of the Federal Reserve, warned policy makers that inefficiencies in trades settling needs to be addressed otherwise, the skyrocketing volume of transactions could cripple trading systems, creating serious capacity problems in the equity markets.

Greenspans warning last week highlights the challenge facing Asia as exchanges are working towards shorter settlement cycles amid the riseĀ in pension investments. In Hong Kong, for instance, there are tales about certain securities houses turning down new clients whenever their settlement systems are overwhelmed by spikesĀ in trading volume...

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