Industry group challenges EU view on high-frequency trading

Trader screensAn association of traders is seeking to challenge what it says are misconceptions about high-frequency trading in the European Union's Markets in Financial Instruments Directive (Mifid II).

FIA European Principal Traders Association, which represents firms that trade their own capital in European exchange-traded markets, said trading benefits the economy by keeping transaction costs low and improving liquidity. It also claimed its members have an incentive to prevent the kind of market manipulation that regulators want to oppose, because such abuse “comes at a hefty price for the market”.

The proposed Mifid II regulations would require high-frequency traders to put safeguards in place to prevent them from contributing to “disorderly” trading conditions. Traders would also have to publish transparency data and transaction reporting. Many in the industry are critical of the legislation and resent the cost of implementing it, although some players, such as IT companies, would be likely to benefit.

“We strongly support measures that ensure safer, more resilient markets, but we urge policy makers to carefully weigh the costs of such measures,” said the association's chairman Remco Lenterman. “No one benefits if badly designed regulations disrupt liquidity and drive up costs for traders and investors.”.

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