Trading Technology

12:49 PM
Justin Grant
Justin Grant
Commentary
Connect Directly
Google+
Twitter
RSS
E-Mail
50%
50%

The Global Fight Over High-Frequency Trading Hits FX

Currency trading platform EBS said it's looking to put the breaks on techniques like flash orders, moves the Financial Times says are aimed at placating ICAP's investment banking clients who are leery of high-frequency traders.

The world of currency trading is apparently the next front in the fight to rein in certain types of high-frequency traders, whom many market participants continue to hold at least partially responsible for the 2010 flash crash.

On Tuesday, EBS – ICAP's electronic FX platform – announced a series of new dealing rules after months of getting feedback from both its buy-side and investment banking clients. Among the new rules, the Financial Times points out , are restrictions on flash orders – automatic trades that are fired off at warp speeds by high-frequency traders.

The paper noted that many investors and regulators are concerned that such techniques mean price quotes can vanish almost as quickly as they appear, and ultimately make liquidity illusory and lead to an unstable marketplace.

From the Financial Times:

The move was widely seen as a charm offensive by ICAP as it attempts to forge better relations with its investment banking clients, who have long complained that certain types of high-frequency traders can distort the market. This was seen in 2010 when the US equity market experienced the flash crash, partly blamed on HFT.

"The forex industry has been proactive for the past 20 years and wants to make sure a flash crash does not occur in this market," said Gil Mandelzis, chief executive at EBS.

"We want to combat anything that is not providing genuine liquidity for the EBS platform," he added.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio
Comment  | 
Print  | 
More Insights
More Commentary
What Will the Financial Back Office of Tomorrow Look Like?
Asset managers are increasingly looking to automate their manual back office workflows. Confluence calls it the "back office revolution."
Bankrolling Technical Debt: A Financierís Guide
Technical debt represents the effort required to fix source code or application problems that put the business at risk.
Staying Ahead of the Game With Continuous Delivery
The need to develop better software faster is leading financial organizations to continuous delivery (CD), a practice pioneered by SaaS companies like Salesforce.
Shore Up Cyber Security Now
Knowing that a data breach can and will happen at some point, asset management firms can manage new operational and regulatory risk with a layered approach to cyber security.
Is Big Data a Problem or an Opportunity?
When it comes to data, financial services firms are, as a rule, quite circumspect. They fear cyberattacks, data theft, data loss, security breaches, data privacy, and human error.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - July 2014
In addition to regular audits, the SEC will start to scrutinize the cyber-security preparedness of market participants.
Video
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.