EU Seen Imposing Standards to Avert Trading Glitches

As reported by Reuters, regulators will impose minimum technical standards on trading platforms after crashes have become more commonplace due to reliability being sacrificed for speed, a consultancy said on Wednesday.

Frederic Ponzo, managing partner at GreySpark, which advises investment banks on trading, said systems are becoming leaner to bump up speed, making them brittle and prone to glitches.

“There is a direct cause and effect. It’s not the infrastructure, but the choice of speed rather than reliability,” Ponzo told a news briefing.

“Corners have been cut for the benefit of latency reduction. Some of the crashes have been publicised enough so that this compromise is becoming apparent,” Ponzo added.

Outages are frustrating for traders and embarrassing for exchanges as competition in share trading becomes ever more intense, partly on the back of having to offer ever-faster services.

Technical problems have hit NYSE Euronext several times in past weeks, while the Madrid bourse has also suffered glitches.

The London Stock Exchange went down for four hours in February and has since launched a super-fast trading services to court more high-frequency trading firms.

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