When Zuma "went missing" in early January, news-trawling high-frequency traders mistook the SpaceX rocket mission (called Zuma) for an Awol SA president. The result: automated currency trades that led to a rand in disarray. Fortunately, the volatility was short-lived, a cheap laugh was had, and life moved on. But Reserve Bank deputy governor Francois Groepe says this type of high-frequency trading, which leverages artificial intelligence (AI), is of concern since it has the potential to cause flash crashes and, ultimately, financial instability. "The big issue is that with high-frequency trading, you have stop losses that kick in and so you can have more pronounced price swings." This can affect collateral values, and introduces the prospect of liquidity and solvency problems in the market. But, because of resource constraints and the need to prioritise, high-frequency trading will not be among the first focus areas for the SA Reserve Bank’s new fintech unit. "Certainly, in the medi...

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