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30 April 2010

EBF on high frequency trading: regulation should not seek to undermine technological progress


EBF believes that market abusive behaviour must not be tolerated and supports the strengthening of the tools available to supervisory authorities. If additional rules are considered necessary, they should be introduce through the trading platforms’ own rules or through Level 2 or Level 3 rules.

Key Points
·         The European Banking Federation welcomes CESR’s thorough research around the issues addressed in the current consultation paper.
·         To date, banks have not identified significant difficulties, but the Federation remains open to CESR’s findings.
·         In considering possible regulatory intervention, care must however be taken not to undermine technological progress, but to rather look at trading behaviour.
·         As a second principle, regulation must seek to ensure equality of opportunities, as opposed to equality of outcome.
·         Clearly, market abusive behaviour must not be tolerated. The EBF supports the strengthening of the tools available to supervisory authorities, where this is considered necessary or helpful.
·         If additional rules are considered necessary, it should be considered to introduce them through the trading platforms’ own rules; or alternatively, through Level 2 or Level 3 of the Lamfalussy process.
 
High frequency trading (HFT)
Upfront, the EBF would underline that regulation should not seek to undermine technological progress, and possibly would not be effective if it did. Rather, regulation should be designed to ensure that markets continue to work efficiently under changing market circumstances. With this in mind, the EBF fully supports CESR’s work to investigate whether appropriate use is made of new technology, and alternatively to consider possible regulatory intervention.


© EBF


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