CMCRC, which is an independent academic centre for capital market research, claims a “tax” or “levy” on messages issued by HFT machines is a bad idea. Australia imposed such a tax from January 2012 and investors are waiting for news from Treasury as to whether it will be continued from June 30. The study by Alexander Sacco and Andrew Lepone looked at Canada’s tax on messages issued by computer trading systems and found that it had coincided with a decline in quote submission, trades, volume and deterioration of liquidity. The chief executive of CMCRC, Mike Aitken, says Australia is the only other country to have implemented a messaging tax. He says the problem is that these proposals “haven’t been tested or modelled before being implemented, leaving whole markets open to the law of unintended consequences”. CMCRC points to empirical research showing there is a positive relation between algorithmic trading and improvements to market quality. HFT has high order-to-trade ratios. That refers to the fact that many messages are issued but only a small proportion are executed.