European Union lawmakers are set to approve some of the toughest restrictions on high-frequency trading, the Telegraph reports. These restrictions are part of a larger package of EU market reforms—due to be voted on by the European Parliament Tuesday—that will address commodity derivatives speculation and investor protection, among other issues.
“With these rules, the EU is putting in place one of the strictest set of regulations for high-frequency trading in the world,” EU financial services commissioner Michel Barnier said on Monday, according to the Telegraph. “While HFT trading might bring some benefits, we need to make sure that it doesn’t cause instability, and isn’t a source of market abuse. That’s what these rules set out to achieve.”
The EU requirements for high-frequency traders include a stipulation that they must have their algorithms tested on venues and authorized by regulators, Bloomberg reports. Firms will have to run their algorithms “during a specified portion of the day,” which will be agreed to in writing with the trading platform.
