The Uncertain Case for Regulating Program Trading

Saturday, January 1st, 1994 at 12:00 am by Richard A. Booth
Richard A. Booth, The Uncertain Case for Regulating Program Trading, 1994 Colum. Bus. L. Rev. 1

This article argues that program trading benefits the stock market and that discouraging market participants from employing the strategy is unwise. Part II discusses the background of the current controversy, and outlines the mechanics of program trading and the problems that it has allegedly caused. Part III describes the role of financial futures as vehicles for hedging as well as for speculation. Part IV outlines the misguided efforts that have been made to control program trading. Part V analyzes the benefits of a system of financial markets in which program trading is largely unrestricted. Finally, Part VI discusses the specialist system and the reasons why program trading presents a particular challenge to it.

Author Information

Professor of Law, University of Maryland School of Law