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Tag Archives: high frequency trading

John Lothian Newsletter: Exchanges Retreat on Trading Tools; Tradeweb launches ETF platform; NYSE chief laments complex markets John Lothian Newsletter,Newsletter

Fund managers and regulators are displeased with US exchanges over certain order types that they say creates an unfair disadvantage for their clients. Platform operator Tradeweb launches a new service that provides multiple price quotes for ETF products to traders. NYSE Euronext chief Duncan Niederauer wants a complete review and overhaul of the structure of US financial markets, believing that the system as a whole has become too complex to serve its essential functions.

John Lothian Newsletter: UK report urges rules to limit HFT risks; CME Challenger Struggles In Largest U.S. Derivatives Market; SEC adopts new risk mgmt rules for clearing agencies John Lothian Newsletter,Newsletter

A UK report, two years in the making, makes several recommendations on how to best limit the risks involved with high-frequency trading systems. The ELX exchange, launched in 2009 to compete against CME Group, is struggling with evaporating volumes as customers walk away from core interest rate products. The SEC adopts rules to regulate risk management practices at clearing companies.

John Lothian Newsletter: Bats Chi-X Europe remains firm market favourite; Stress for Banks, As Tests Loom; Eurozone launches E500bn rescue fund John Lothian Newsletter,Newsletter

BATS Chi-X Europe has seen its share of big changes, and it has managed to continue its role as a significant competitor in the region. Banks and regulators jockey for position regarding this fall’s latest stress tests, as banks want more details about how regulators are producing their results, and the regulators are so far content with their “none of your business” stance.  Eurozone ministers formally unlock the doors for a half-trillion euro rescue fund, but they still haven’t conclusively indicated whether Spain and Ireland are allowed to come inside for help.

John Lothian Newsletter: ICE Traders Held Talks With CME; ECB’s Nowotny Calls For High-Frequency Trade Ban; Spanish Regulators Clear LSE-LCH Deal John Lothian Newsletter,Newsletter

Soft commodity traders of ICE Futures U.S. contracts are said to have discussed the possibility of shifting their trades to rival exchange CME Group, if the CME were to offer similar products. In Europe, central banker Ewald Nowotny says it’s time to outlaw high-frequency trading; no word on whether less-frequent trading algorithms would be allowed, or how one is supposed to establish a threshold for discerning between the two.  In London, LSE’s goal of taking a controlling stake in clearinghouse LCH.Clearnet takes one step forward as antitrust regulators in Spain give a thumbs-up.

John Lothian Newsletter: Indonesia Eyes Foreign Investment In Commodity Exchanges; Hong Kong-LME Deal Spurs Biggest Exchange Drop; Wash Trading By HFT Firms Said To Face US Scrutiny John Lothian Newsletter,Newsletter

Indonesia says that foreigners can purchase up to a 40% stake in its commodity exchanges, hoping to spur growth and interest there. HKEx bids for the London Metal Exchange, hoping to grow its business, but in the process its stock has lost a huge chunk of its value. Regulators are investigating high-frequency trading companies to see if they are conducting zero-net trades with themselves as a way to alter market prices to their advantage.

TAC 2.0 Commentary,Regulation,Tech / HFT

John Lothian

Yesterday was my first meeting in Washington, DC as a member of the CFTC’s Technology Advisory Committee, or TAC 2.0 as it is called. The meeting featured reports from working committees on aspects of high frequency trading, or HFT, as well as presentations about SEFs. The first task from Working Group #1 was to define what HFT is. The working or provisional definition of HFT from Working Group number #1 was: High frequency trading is a form of automated trading that employs: (a) algorithms for decision making, order initiation, generation, routing, or execution, for each individual transaction without human direction;…

John Lothian Newsletter: NYSE Sees Danger Of Exchanges Becoming ‘Showrooms’ For Prices; HFT curbs may take Europe ‘back 7 years’; Hedge funds may be allowed direct access to China markets John Lothian Newsletter,Newsletter

NYSE’s Niederauer sees the danger of a exchanges becoming a place where traders browse for quotes before doing their actual trading off-exchange. The FIA EPTA in Europe warns that HFT regulation and slowdowns may move market progress back several years. Chinese regulators are considering allowing foreign hedge funds to directly trade in domestic companies and financial products. In the top box, John Lothian discusses the importance of reading what one is given; and you’ll also find a reminder, in case you missed yesterday’s special report, to come help us improve MarketsWiki next week.

John Lothian Newsletter: US Appeals Court Revives ISE Patent Case Against CBOE; CME said to be among bidders for London Metals Exchange; Hong Kong markets must adapt, SFC says John Lothian Newsletter,Newsletter

A US appeals court judge reviews the patent decision between ISE and CBOE, and decides to revive the 5+ year running disagreement. The LME says it has received several bid proposals for its purchase, and CME Group may be among the bidders. The Hong Kong exchange (coincidentally also bidding for LME) is being warned by the regional regulator that it’s vulnerable to sticky HFT, dark pool and other situations that are common in other parts of the world, and that it’s time to get moving to address those issues. In the top box, you’ll find a link to Doug Ashburn…

John Lothian Newsletter: Happy Flash Crash; Nasdaq to Launch New Stock-Options Trading Venue; Bids for the London Metal Exchange Due Monday John Lothian Newsletter,Newsletter

The flash crash was two years ago; high-frequency trading since then has bred high-frequency analysis over unsupervised algorithmic trading, but less consensus or operational changes. Nasdaq is going to launch a new options platform, too! Concern is growing that since the number of people trading options isn’t increasing exponentially, adding lots of new options venues will do little other than fragment the existing order pool. And if anyone else wants to bid for LME, today is the day to get them in.