Spotting a heart-shaped cloud in the sky

Last week the Foresight Project published its written report on HFT (see previous blog Some things in life are bad…) which gave a balanced picture with carefully drafted conclusions. However, during a presentation of the report’s findings on 23rd October, there was one particularly interesting issue that caught my attention. One of the speakers referred to a case, presented by Nanex, on natural gas futures trading on NYMEX in June 2011. It was used during the talk to highlight... Read More

Some things in life are bad…

The next step in the MiFID parliamentary process is the EP plenary vote, to gain the backing of the entire house, scheduled for tomorrow, Friday 26th October. The EP is forging ahead, with little likelihood of further changes, it seems, though there is a debate on MiFID scheduled for today. Given where we are in the timeline of the parliamentary process for MiFID II legislation, it will be very interesting to see if the findings and recommendations of the Foresight Project, whose... Read More

A sensible request deserves a sensible response

The German government and the European Commission want to mandate earmarking of every algorithmic order in order to identify the originating strategy. The reason being that market supervisors have a difficult job keeping up with all those technical innovations in financial markets. In the good old pit trading days traders were restricted by physical limitations, but in a world where electronic networks allow investors from all around the world to meet in virtual marketplaces things... Read More

A health check for dark pools?

Over the past few years, dark trading has been the subject of considerable attention all around the world and its success in growing market share has everyone talking about this phenomenon. When they first came into operation dark pools were embraced as an exciting new way to trade large orders with minimum market impact. More recently, however, with the increased levels of HFT and a continuing decline in average trade size, dark pools have become the subject of some concern... Read More

Think again, things are about to change!

Do you think a retail broker has to connect to all exchanges in Europe in order to offer best execution? Of course not! MiFID’s current definition of best execution is principles-based and takes into account more than just the execution price, but things are about to change. The latest MiFID II draft from the ECON vote contains a number of amendments that may cause you to reconsider your answer. Firstly, Article 27 suggests a change to best execution policy for retail clients... Read More

For every action, there is an equal and opposite reaction

ESMA recently published its Guidelines on ETFs and other UCITS issues. As their Chair, Steve Maiijoor, puts it “these comprehensive guidelines are aimed at strengthening investor protection and harmonising regulatory practices across this important EU fund sector”. At a high level here are the key provisions (plus some of my own comments): 1. UCITS ETFs must by identified as “UCITS ETF” (imagine that!) 2. UCITS ETF units traded on a secondary market... Read More

What you need to know before buying a German car

The latest draft of the German HFT ruling has some fairly serious implications for market participants and there is little time to prepare. The new law is expected to be finalised sometime in the middle of next year and the legislator expects the industry to comply within a three month grace period. Let’s look at some of the features added since the previous draft published in July. Erstens: mandates that all algorithmically generated orders have to be flagged with a unique... Read More

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