At a speech at Oxford University in Britain on Friday night, Greg Medcraft, chairman of the Australian Securities and Investments Commission, described the trust required in order for capital markets to maintain their integrity and outlined ways in which the regulator is alleviating some of the concerns surrounding high frequency trading and dark pools.

High-frequency trading refers to automated transactions completed by computer programs at high speeds, with high turnover rates. Dark pools are private exchanges where investors, usually large investment banks, make trades anonymously.

Both practices are legal in Australia, with a number of start-ups developing software that enable the rapid transfer of information.

But in recent years, retail investors have criticised the burgeoning practices, saying they squeeze out local traders with less computing power and distort fair price discovery.

That said, Mr Medcraft insists the regulator has closely examined this recent money-making innovation and has developed its own mechanisms in order to detect misconduct in the marketplace and preserve the integrity on the ASX.

"There [are often] questions about the fairness of dark venues for investors, with concerns that they are not regulated as markets and 'free ride' on the pricing and information set on exchange markets," Mr Medcraft said.

After a review in 2012, ASIC changed its rules to enable wholesale clients to request that participants disclose when they have traded with their clients as principal and improved transparency around "crossing systems" - a system matching buy and sell orders electronically without first routing the order to a public exchange.

After another review in 2015, ASIC found that, despite the noisy outcry that high-frequency trading was disadvantaging mum and dad investors, the current level of trading was not distorting the market nor influencing its role in facilitating the economy.

ASIC has developed tools to monitor new innovations sweeping into the market and is leveraging the onslaught of data collected.

"We are now also increasingly looking to overlay behavioural economics principals across our market surveillance work," Mr Medcraft said.

While ASIC closely watches the evolution of high-frequency trading and dark pools, it has moved to shut down practices that undermine the integrity of the ASX.

In 2015, ASIC's surveillance software uncovered an operation targeting Telstra shares traded on ASX's Centrepoint dark pool and Chi-X Australia's "hidden public dark venues". A group of traders had been "pinging" dark pools with small orders to find buys and sellers. Using their lightning quick connection they could buy the stock ahead of the broker and then sell it back at a profit.