Alan Kohler's Take on High Frequency Trading

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Lawmakers Back High-Frequency Trade Curbs in EU Markets Law

High-frequency traders in the European Union are set to face some of the toughest rules in the world, after legislators backed rules that they said would curb volatility and make markets safer.

The limits include standards meant to keep the price increment for securities from being too small, mandatory tests of trading algorithms and requirements that market makers provide liquidity for a set number of hours each day. The curbs are part of revamped EU markets legislation approved yesterday by the European Parliament voting in Strasbourg, France.

The price increment rules and other measures requiring trading to stop if “price volatility goes beyond a certain level” will slow down high-frequency trading “to a more manageable pace,” Markus Ferber, the legislator who led the assembly’s work on the standards, said in an e-mail before the vote.

http://www.bloomberg.com/news/2014-04-15/lawmakers-back-high-frequency-trade-curbs-in-eu-markets-law.html