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 final report was published on Tuesday, make it into the Level 1 text at all!

This UK government sponsored independent report gathered evidence from a large pool of 150 academics from 20 countries who unanimously concluded that regulators’ current plans to force minimum resting times on orders was not advisable and could reduce liquidity. Will this make any difference whatsoever to the outcome of the vote?

The Foresight Project found that some of the commonly held negative perceptions surrounding HFT are not supported by the available evidence and, indeed, that HFT may have modestly improved the functioning of markets in some respects, according to John Beddington, the UK’s chief scientific advisor and lead author of the report. It found no direct evidence that HFT increased volatility, nor evidence to suggest it has led to an increase in market abuse.

It is also interesting to see how the Foresight Project findings have been reported in headlines across the globe. The Financial Times reported that “UK report urges rules to limit HFT risks“, whilst the Washington Post ran the headline “Regulators Should Avoid Choking HFT Benefits, U.K. Panel Says” and the Indian Express went with “UK report drops EU bid to curb fast trading“.

Good to see there are some who always look on the bright side of life!

3 Responses to “Some things in life are bad…”
  1. C Furlong says:

    I suspect that this primarily UK report will not meaningfully affect any EU hardliners to progress their objectives to ban HFT, Politics is mostly undeterred by facts.
    The findings are a surprise to many that the report is so relaxed about HFT and the complex market ecosystem we undoubtedly have.
    Foresight went specifically looking for trouble in HFT and didn’t find much, now that means either many of the greatest professors in the world think HFT is fine or they didn’t look hard enough.
    I suppose it is outstanding in the fact that it didn’t find the evidence.
    Either way this report will be hard news for the anti-HFT brigade as they try to discredit it.

  2. C Furlong says:

    So it seems as the dust settles this week that the main complaint from the Anti-HFT lobby about the report is about the make up of the High Level Stakeholder group of Foresight. The accusation being that a number of the groups members on the surface look like their organisations make money out of and therefore support HFT.
    This seems like a worthwhile observation when we are presented with what is purported to be a truly balanced report and perhaps the role of the high level stakeholder group needs to be explained further to avoid the call of a whitewash. In fact I always figured the reason Fidessa was not invited to contribute to this study was our direct business association with electronic trading.

    No doubt that it might irritate the many eminent academics that their work might be seen to have been compromised by the industry they were investigating. Nonetheless this report no doubt will be the seminal documentary of our electronic market in 2012.

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