HFT defined NOW and regulated in Europe
I am sure this will set new standards for rest of the world
Before introducing regulations over HFT, the text needs to define what exactly comes under the gambit of HFT. High Frequency Trading is described as either:
- Submission of at least 4 messages per second with respect to all instruments traded on a trading venue OR
- Submission of at least 2 message per second with respect to any single instrument traded on a trading venue
Implications for traders
- Authorization required: A firm engaging in a High Frequency Algorithmic Trading (HFAT) techniquewill have to become authorised to continue to trade using a HFAT technique.
- Store historical data: HFAT investment firms will be required to store time sequenced records of their algorithmic trading systems and trading algorithms for at least five years.
- Market Making: HFT firms who use market making strategies on trading venues will be required to enter into market making agreements with the venues. This design ensures that they provide liquidity on a consistent basis.