Under the draft, HFT practitioners will need prior authorisation, while "excessive" order-to-trade ratios will be curbed, says Reuters.

Rules will apply to traders who use high-frequency systems, not just those that run the terminals. Orders made from the systems will be marked so they can be distinguished from normal transactions.

Citing sources, Reuters says that Angela Merkel's cabinet is poised to approve the draft today and it will then go before parliament.

Germany is thought to be pushing ahead with its plans in a bid to keep up pressure on European authorities, which are in the process of laying out their own HFT rules. A vote on the sweeping set of reforms planned for the Markets in Financial Instruments Directive, dubbed MiFID II, is scheduled for Thursday in the European Parliament.

German cabinet to agree tougher rules on high-frequency trading - Reuters