I am constantly asked about market abuse and manipulation within our markets and how best to combat these undesirable threats . Since entering the trading arena in 1982 I have witnessed a number of abuses BUT have always believed that exchanges have monitored
a fair and orderly market place ;however I now struggle to accept this especially with EUREX ENHANCED ORDER BOOK INTERFACE .
The opportunities for certain traders to abuse this service are great ; this interface has the ability to disclose every limit order ; stop order ; part fill and cancelled orders and therefore a perfect dream for HFT . This function perfectly
allows front running ; squeezing and stop hunting under the very gaze of a senior exchange ; this seriously hampers the retail trader and probably answers why he always feels short changed !
Exchanges have to convince regulators that they provide "fair and orderly markets" to gain their R.I.E status and this interface basically allows a two tier market which to me sounds ilegal . E.O.B.I. subscribers get alll matching/order book event
messages before anyone else .Therefore sadly every order entered can be intercepted and overtaken and again every market order made to pay worse price . The Clayton rule on Manipulation i believed covered this ; however Exchanges and EUREX have different
ideas , they obviously like rats in the granary .