For High Frequency Trading, Speed Limits Are Not the Answer

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Over at the all-new Quartz Magazine, Simone Foxman writes that, rather than trying to outlaw High Frequency Trading, regulators should learn how to better regulate it so that long term investors can benefit.

The European Parliament’s decision to put an arbitrary speed limit on HFT, though, is misguided. ”Just because you slow the order down doesn’t mean people aren’t going to be trying to cut to the front of the queue,” argues Adam Sussman, Research Director at the TABB Group, a group closely connected to discussions of HFT at the Commodities Futures Trading Commission. “Slowing markets down probably wouldn’t have any impact on making more stable markets.” Instead, he argues, regulators need to impose “an actual cost-benefit in favor of not blowing up the market.”

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  1. Martin Hiegl says

    “We’ll not blow up the market, if you give us “cost-benefits”.” That’s what I call first-class blackmail.
    The general prohibition of automated trading would solve that much better – if each trade has to be requested by a person, even computated trades have this lag of a person clicking a button. This lag makes it senseless and so we are back at real trading.
    [Disclaimer: Personal Opinion]