21 December 2014

65591

Christian Voigt - Fidessa

36Posts 88,442Views 0Comments

Smoke-free markets

12 December 2013  |  1819 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

Slave to a label?

18 December 2014  |  1440 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation

Systematic Internaliser on a wire

03 December 2014  |  1489 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation

Synchronising regulation

25 November 2014  |  1456 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation

Refocusing on auctions

07 November 2014  |  1573 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation

More rules, more problems?

31 October 2014  |  1532 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 is commenting on Christian's posts

Sreeram Yegappan
Ketharaman Swaminathan
Neil Crammond