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By Mark Melin, Chicago-based editor of Opalesque Futures Intelligence:
How does one define a previously un-definable topic such as High Frequency Trading?
Sources close to the Commodity Futures Trading Commission (CFTC) indicate new thinking may be underway regarding the topic of High Frequency Trading (HFT). Speculation is this thinking could look at the relative market impact HFT may have in a given market move as a legal definition. Such a definition could consider the relative impact of a particular HFT player as a percentage of a market damaging move and could be used for potential CFTC action on the issue. This new thinking could be outlined sometime in March, sources told Opalesque.
Current US regulation regarding HFT is considered by some market participants to be behind the curve relative to the European Union. In the EU, for instance, algorithm type is used as an identifier to determine market participant behavior during crisis conditions. "There is significant uneasiness on the speed in markets," noted Vassilis Vergotis, Executive Vice President, Head of Eurex, Americas.
Dr. Randolph Roth, Executive Director at Eurex, noted the difficulty to define HFT and how speed was now being used as a risk management tool: "HFT is about technology that enables a strategy."
The Eurex exchange monitors market participant based on strategy, differentiating between HFT pro...................... To view our full article Click here
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