Italy to Limit High-frequency Orders

As reported by Jeremy Grant and Rachel Sanderson, Italy’s stock exchange plans to charge traders if they send too many orders  into its system, in an effort to curb what regulators see as excessive numbers  of orders, according to people familiar with the matter.

The move comes amid a wider crackdown on “high-frequency” trading (HFT),  which uses computers to generate high volumes of trades often done in the blink  of an eye.

France is working on imposing a  financial transactions tax on equities and derivatives trading, in part to  curb HFT.

Borsa Italiana is to introduce a new version of a pricing mechanism that it  operated about four years ago that would charge traders sending in orders above  a certain limit, set by the exchange.

The move comes at the request of Consob, the Italian markets regulator, and  amid wider efforts in Europe to clamp down on high-frequency trading, which uses  computer algorithms to generate high volumes of trading “messages”.

Giuseppe Vegas, the head of Consob, made the request to Borsa Italiana late  last year, when Italy was in the throes of sovereign contagion, to introduce a  tariff mechanism to “disincentivise” an excessive numbers of orders.

Mr Vegas on Monday told the FT that the decision had been made after a  meeting involving representatives from the US, UK, France, Germany and Italy.  They had decided it was necessary to put “blocks” on the system “to slow down” high frequency trading transactions in an effort to achieve some stability in  the markets.

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