Report on algorithmic trading on NASDAQ Copenhagen

A new report from the Danish Financial Supervisory Authority maps trading in securities carried out by computers on NASDAQ Copenhagen. The report also addresses the possibility of supervising algorithmic trading, including the so-called high-frequency Trading.


Director, communication 

Søren Møller Christensen


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Today algorithmic trading amounts to approximately 50 per cent of all trading on NASDAQ Copenhagen, and high-frequency trading alone accounts for around 15 per cent.

The investigation shows that overall the extensive use of computerised trading has resulted in better liquidity on the market. There are no signs of major risks being involved, such as major fluctuations in prices as a consequence of algorithmic trading.

Like a number of other markets, NASDAQ Copenhagen has introduced automatic switches reducing the risk of large price fluctuations as a consequence of eg misprogrammed algorithms or keying errors. So far no market disruptions have been observed, such as "flash crash" resulting in large price fluctuations due to for instance misprogrammed algorithms.

The Danish FSA's review of trading data does not indicate extensive use of trading strategies which may be considered market abuse. As the largest Danish shares are typically also traded on foreign stock exchanges, it cannot, however, be ruled out that market abuse may occur in connection with algorithmic trading across the stock exchanges.

Algorithmic trading on NASDAQ Copenhagen is to a great extent carried out by enterprises which are not under Danish supervision. The supervision of algorithmic trading is therefore largely based on the supervision of NASDAQ Copenhagen as a market place. New EU regulation expected to come into force in 2018 will introduce a number of specific requirements to algorithmic traders, and it will be a requirement that HFT traders are under supervision

Full report here.