29 March 2015

65591

Christian Voigt - Fidessa

42Posts 111,438Views 0Comments

Smoke-free markets

12 December 2013  |  1868 views  |  0

In recent months regulators have increased their focus on detecting and reporting possible incidents of market abuse. In Europe trading firms are expected to check for potential offences and report their suspicions to the regulator. As part of the MAD Review, the current list of indicators for market abuse will be promoted from a Level 3 document to the newLevel 1 regulation text, cementing the shift in focus. Additionally, ESMA is consulting on a number of new indicators for the Level 2 text.

While some of the new signals come as no surprise – high order-to-trade ratios, for example – others, such as “smoking” appear to be rather awkward. According to ESMA, the trading practice of smoking describes the “posting of alluring limit order…to attract slow traders”. What this actually means in terms of day-to-day operation is unclear. The activities of oil market speculator Michael Coscia (found guilty of market abuse earlier this year) are unlikely to be considered smoking because the whole incident of abuse, including the response by the ‘lured victim’, took place within 609 milliseconds. Incredibly fast in human terms, but an eternity for some HFTs. Besides, is any order that decreases the spread ‘alluring’? If that was the case, there would be an awful lot of potential market abuse going on. Let’s hope that the on-going consultation process brings some clarity before the markets are designated smoke-free zones.

 

TagsTrade executionRisk & regulation

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Latest posts from Christian

Left in the dark

26 March 2015  |  938 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation

Holding a steady course

12 March 2015  |  2327 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation

On a quest for answers in Paris

18 February 2015  |  3340 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation

One step forward, one step back

06 February 2015  |  3544 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation

Return of the concentration rule

22 January 2015  |  4075 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation

Christian's profile

job title Senior Regulatory Adviser
location London
member since 2013
Summary profile See full profile »
I'm a Senior Regulatory Adviser at Fidessa. I focuse on the growing regulatory and functional requirements for multi-asset automated trading systems, supporting Fidessa's clients across Europe in meet...

Christian's expertise

What Christian reads
Christian writes about

Who's commenting on Christian's posts

Sreeram Yegappan
Ketharaman Swaminathan