Europe Looks to Curb High-Speed Trading
September 18, 2012
Leading policy makers and members of the European Parliament are calling for a ban on high speed trading on the continent.
European Central Bank council member Ewald Nowotny late last week called for a ban on high-frequency trading, claiming the use of computer algorithms to create multiple high-speed trades has no real value.
The call from Notwotny, who heads the Austrian National Bank, came just before a September 17 proposal that the ECB gain new powers to monitor the performance of the 6,000 or so banks in the eurozone.
The arrangement would be known as the “single supervisory mechanism.” The approach would call for the ECB to take over tasks such as authorizing banks and other credit institutions, ensuring they have enough working capital to continue operating even when sustaining losses. The ECB also would monitor the activities of financial conglomerates.
Expected to have an even greater impact is the crucial vote on the European Commission’s Markets in Financial Instruments Directive, MiFID II, which is scheduled for September 26.
MiFID II will set new ground rules for the way financial markets operate in Europe and may result ini measures designed to curb the rise of high-frequency trading.
T he European Parliament’s Economic and Monetary Affairs Committee (ECON), has been meeting in an effort to establish common ground between pro-HFT trading interests and those who would curtail or moderate HFT before the vote takes place.
Brussels-based lobbyist FIA European Principal Trading Association (FIA EPTA), for example, is aligned with pro-HFT factions, while another lobbying group, Finance Watch, has come out for strong modifications to HFT. MiFID II is expected to have the greatest impact on high frequency traders as well as broker-dealers. HFT currently accounts for about 40 percent of all trading in European equities.