The near-catastrophic episodes in the high-speed trading markets in the US are shifting the world view of US markets as examples to follow to one of what not to do. US regulators have been slow to respond to the trading debacles. The SEC has proposed no new rules this year pertaining to high speed trading.
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Germany, on the other hand, advanced legislation that would force high-speed trading firms to register with the government. It would also restrict firms’ ability to place and cancel huge orders.
This strikes at the heart of high-speed trading firms’ ability to make money. Their strategies are built on nuanced changes in the marketplace.
The European Union agreed to institute a similar approach and their rules would apply across Europe if the continent’s governing bodies approve the unified banking system.
The most rapid and widest sweeping changes have come from Canada. But Canada also does not want to end up like the US, going from one exchange to 13 with dozens of dark pools.
The SEC has been dually focused. One has been on creating rules mandated by the Dodd-Frank Act. The high-speed trading firms have been trying to protect themselves against new regulation.
Two measures under consideration by Congress are a moratorium on new high-speed trading firm creation and mandate a kill switch that could be activated during a trading snafu.
The slow approach of Americans has found more favor since a rush by other countries
to institute new rules could threaten the low prices that enable such fast trading in the first place.
Most agree some that new rules need to be created because technology has developed too quickly without preserving market integrity.