Launching its position paper on the review of the EU's Markets in Financial Instruments Directive (known as MiFID II), FIA European Principal Traders Association today addressed the misconceptions surrounding high-frequency trading (HFT).
"It's time to bring more balance to the HFT debate, which until now has been driven by emotive language, anecdotes and fabrications rather than hard fact," FIA EPTA chairman Remco Lenterman said.
"For example, many people don't realise that market abuse - as well as being morally reprehensible - comes at a hefty price for the market. So principal trading firms such as our members have a very real economic incentive to fight market abuse and back regulatory reform," Lenterman said.
He noted that the industry's critics chose to overlook the value that principal trading firms add to the real economy in terms of lower transaction costs and greater liquidity. FIA EPTA represents firms that trade their own capital in the European exchange-traded markets. The association estimates that its members are responsible for a substantial part of the traded volumes on European exchanges and multilateral trading facilities.
The position paper released today is part of its ongoing work with European policymakers and regulators to help shape financial regulation that ensures transparent, robust and safe markets to the benefit of all end-users. The paper highlights FIA EPTA's backing for:
a comprehensive regulatory framework and the regulation of all market participants with memberships to regulated markets and multilateral trading facilities;
well calibrated order-to-trade ratios determined by trading venues to ensure orderly trading on their platforms;
trading venues and market participants with robust risk controls in place to address risks inherent in electronic markets as well as ESMA's guidelines on systems and controls in an automated trading environment; and
transparent and open markets along with pre- and post-trade transparency measures and onexchange trading.
FIA EPTA, which supports transparent, robust and safe markets with a level playing field for all market participants, endorses the objectives of MiFID II. It is engaging constructively with stakkeholders to address any concerns about risks thought to be posed by HFT, while acting to safeguard the benefits of electronic trading.
"We strongly support measures that ensure safer, more resilient markets, but we urge policymakers to carefully weigh the costs of such measures. No one benefits if badly designed regulations disrupt liquidity and drive up costs for traders and investors," Lenterman said.
Read the full paper:
Download the document now 254.3 kb (PDF File)