US securities industry regulator FINRA recently implemented new time-stamping rules, a topic also on ESMA’s MiFID II task list. FINRA requires US firms
to express time in milliseconds when reporting trades to the FINRA facilities and order events to OATS, while ESMA’s proposal wants HFT firms to timestamp records
to the nanosecond. That’s a whopping one million factor difference!
Additionally, FINRA is currently consulting on business clock synchronisation, an area ESMA is looking at too. FINRA proposes reducing the acceptable drift
from your atomic master clock to 50 milliseconds, whereas ESMA has plumped for microsecond accuracy. Considering that FINRA believes the 50 millisecond drift is the “best option to facilitate surveillance of high frequency and algorithmic trading” in the largest
equity market in the world, I’m surprised to see that Europe believes the error margin should be 50,000 times more accurate. Maybe it’s time to ask the regulators to synchronise their rule-making.