Jim Brunsden has a note on Bloomberg today on the new European HFT regulations, inspired, he notes by Michael Lewis’ new book.
European Union lawmakers are poised to approve some of the toughest restrictions in the world on high-frequency trading, the first crackdown in the aftermath of Michael Lewis’s latest book, “Flash Boys.”
The curbs are part of revamped EU markets legislation ranging from commodity derivatives speculation to investor protection. The high-frequency trading 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.
“With these rules the EU is putting in place one of the strictest set of regulations for high-frequency trading in the world,” EU financial services chief Michel Barnier said in an e-mail. “While HFT trading might bring some benefits, we need to make sure that it doesn’t cause instability, and isn’t a source of market abuse. That’s what these rules set out to achieve.”