Lawmaker: Lets meet in the middle- between fast and ultra fast. Quant- Hmm hows ultra low latency. Lawmaker that may work… :-0 Yessss!! 2 points for the algo boys.
Reminiscent of when the Goldman boys ran laps around the “law” at DC hearing.
I’m sorry, come again, what is a derivative? uhh, its like a hedge fund- it can be whatever you want it to be. Hmm, no, you don’t like that one? ok,
BRUSSELS (Reuters)—European lawmakers want to slow down high-speed trading by half a second in an effort to dampen the kind of financial speculation blamed for the stock market’s “flash crash” in May 2010.
One of the many financial practices which drew criticism in the aftermath of the financial crash, which briefly wiped out about $1 trillion in market value in a matter of minutes, was high-frequency trading, in which powerful computers are used to churn out thousands of trades in split seconds in order to profit from tiny price discrepancies.
Traders should be obligated to hold trades for at least 0.5 second, a position paper from the European Parliament on the second Markets in Financial Instruments Directive will say, parliamentary sources told Reuters.
And unlike the European Commission, which initiated the regulation shake-up, the European Parliament does not want to stop financial advisers from receiving commissions for selling financial products as long as the fee structure is clearly spelled out.
The paper will be put to a vote by the Parliament’s economics committee next Wednesday [Sept. 26] and to the full chamber of over 700 deputies in the autumn. Once the Parliament is finished, members will have to negotiate their position with the European Commission and the E.U.’s 27 governments.
The parliament’s proposal is one of a raft of measures by its members to introduce radical financial reforms such as tougher bonus caps for those working in the financial sector. It also comes as members prepare to negotiate a complete overhaul of financial supervision in the bloc, potentially handing full oversight over the bloc’s 6,000 banks to the European Central Bank.
A minimum time for holding trades could take the edge off the industry’s key selling point: the ability to make money from unexpected volatility in the market quickly.
The draft MiFID II law will require all traders who use algorithms — a computerized set of trading instructions — to provide appropriate liquidity and comply with rules that prevent them adding to volatility by darting in and out of markets.
The regulation is expected to take effect in 2014.