High-frequency Trading Rules Will Hurt German Liquidity, Exchanges Say

AccHigh-Frequency Trading Leaders Forum 2013, "Strategic and Tactical Insights for Investors, Speed Traders, Brokers and Exchanges"ording to Bloomberg’s Jonathan Morgan, restrictions on the minimum time orders must be held in German equity markets would do little to increase safety, the nation’s exchanges said as lawmakers debated proposed legislation.

“The political, easily understandable argument that the introduction of a speed limit leads to more safety on the road is not applicable one-to-one to the capital markets,” Stefan Mai, head of market policy and European public affairs at Deutsche Boerse AG (DB1), said in a phone interview yesterday. “It will just introduce more complexity. Imagine an Autobahn with traffic lights every 2 kilometers. Will it slow traffic down? No. Because when the lights are green, traffic will race anew.”

Lawmakers are scheduled to hold a public meeting at 2 p.m. today in Berlin to discuss curbs on high-frequency trading, with remedies up for debate including one that orders must be kept in the market for at least half a second before they are canceled. High-frequency trading has come under increased regulatory scrutiny in Europe and the U.S. after the so-called flash crash in May 2010, when the Dow Jones Industrial Average briefly lost almost 1,000 points.

“Minimum resting times for orders will increase volatility,” Artur Fischer, co-chief executive officer of Boerse Berlin AG who will attend the meeting at the Bundestag, Germany’s lower house of Parliament, wrote in an e-mail. “At times of high volatility, no trading will take place and prices will have to be estimated rather than be based upon real volume.”

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1 Response to High-frequency Trading Rules Will Hurt German Liquidity, Exchanges Say

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