Hugh Marsden, a London stockbroker since 1960, has seen many bear markets. But the stomach-churning volatility of the past two months is unlike anything he has witnessed before.

Now a broker at investment manager Brewin Dolphin, he suspects that electronic trading - and specifically computer-driven algorithmic trading - may be to blame.

"I think there's no doubt that without any human touch you are going to get effects that you cannot necessarily predict," he says.

Michael Bloomberg, mayor of New York and founder of the financial information business that made him his fortune, told a securities industry conference this week: "Computers are deciding when to buy and when to sell. When the herd mentality gets automated, the stampede [in and out of markets] gets turbocharged."

Equities trading is now almost completely electronic as machines have taken over from manual trading, emptying trading floors of humans across the world. Algorithmic trading, a type of electronic trading that uses computer algorithms - or "algos" - to direct trades, has grown particularly fast recently. Deutsche Börse says about 40 per cent of volume on its Xetra platform comes from algorithmic trades.

Some of the most common algos are "time slicers", where computers are programmed to release a percentage of the total customer order into the market at - say - five minute intervals. A "guerrilla" algo decides on behalf of a client what price would be appropriate for a particular trading strategy and fires out trades to multiple venues at a time.

Some analysts argue that while algos do not produce volatility, they can amplify existing volatility considerably. Matt Samelson, senior analyst at Aite Group, a consultancy, says: "Algos are set to execute at certain points and what starts off as manual panic selling then gets picked up by an algo and high-frequency traders."

The sheer speed of trading, some say, is also helping to exacerbate price moves, in conjunction with the speed of information reaching the market.

BATS Trading, the alternative equities platform that has about 12 per cent market share in US equities, can get a trade done in 400 microseconds. The blink of a human eye takes 300 milliseconds. Anthony Kirby, director in the regulatory and risk management practice at Ernst & Young, says the "feedback loop" caused by trading and information speed is "a lot stronger than it might have been 20 years ago".

But others insist that it is actually the absence of algos that can cause volatility to spike. Some of the sharp late session sell-offs and gains of recent days in New York have taken place amid unusually low trading volumes.

On October 15, for example, when the S&P 500, Wall Street's benchmark equity index, dropped 9.9 per cent, its largest one-day drop in more than 60 years, volume was only 11.5bn shares. This was the third lowest volume day that month, with only October 1 and 2, when the ban on short selling financials was still in effect, having lower trading levels.

Analysts said the low volumes could be attributed to the absence of many traders, particularly statistical arbitrage players who would ordinarily be responsible for significant volume on a daily basis.

Dan Mathisson, head of Advanced Execution Services, Credit Suisse's algorithmic trading platform, says that when the short selling ban came into force in the US in mid-September, hedge funds "turned off their long/short algos, volatility began to spike and bid/ask spreads widened".

"If you take algos out, you enhance volatility. A lot of people don't understand that yet. It's tied to the hedge funds reducing their trading and exiting the market, leaving the market much more exposed to volatility," he says.

Mark Hemsley, chief executive of BATS in Europe, adds: "When talking about the unprecedented volatility we've seen, one shouldn't overlook the credit crisis and its far-ranging impact, including the outflow of funds from many investment vehicles, including mutual funds."

Chris Smith, head of business development for Euro Millennium, an independent "dark pool" trading venue in Europe, says the jury's "still a bit out" on the whole issue.

"I believe that the case for whether volatility is being driven by algorithmic and electronic trading, or whether it is there naturally because of market fundamentals, hasn't been made yet one way or the other. I don't think there has been any precedent for what's been happening in the last six weeks."