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Thomas in Blockland

Thomas the crossing network wasn’t happy. For years he had enjoyed helping his friends buy and sell things amongst themselves. Sometimes he would even step in directly and agree to buy or sell something himself, especially if there was an awful lot of it. But now he had a tricky choice to make. The ruler of the land, The Regulator, had been convinced by the Exchanges that... Read More

Bumpy road ahead?

Interesting story in the FT today about IEX and its application to become a fully-fledged exchange. At issue is IEX’s so-called ’speed bump’ that will slow down the HFT ‘boy racers’ and so make markets safer again. Naysayers claim that the inclusion of a speed bump is contrary to the rule that investors should have “immediate” access to the... Read More

The Tomorrow People

Josh was in high spirits, trading had been good that day. He had downloaded an algo app overnight that allowed him to arb Google dollars against Apple iCoins. It was no longer any use, of course, as by now everyone else had downloaded it too. But his edge had been that his simulator had processed it faster than anyone else. This was required by the regulator to check it contained... Read More

GMEX – going to eleven?

The announcement that new derivatives exchange GMEX has received investment from SocGen reopened the debate here as to the future of rates trading and who the likely winners are going to be. Reliable data is hard to come by on exactly what is happening to OTC volumes and where they are going. Such evidence as does exist seems to show a steady increase in SEF volumes, although this... Read More

Maybe markets are unfair, but are they rigged?

The publication of Michael Lewis’s new book Flash Boys has reignited the whole HFT/dark pool debate (actually, maybe it’s never really gone away). The point people seem to continually miss in this debate is the distinction between “unfair” and “rigged”. To me the term rigged implies some malevolent conspiracy between certain members of an ecosystem... Read More

Not even wrong

Gently easing my way back into the daily grind after my annual vacation I came across the report that MPs in London are proposing to tax HFT. They must have been drinking more sangria than I have over the past few weeks. For a start, any tax aimed at changing behaviour needs to be very clear about what behaviour it is targeting and the preferred outcome it is trying to achieve.... Read More

HFT (High-frequency Taxing)

It’s always seemed like the wrangling over regulation in Europe’s capital markets was, in many ways, a proxy for the broader political debate raging across the region. No surprise, then, that on the eve of today’s speech by David Cameron we saw that the European finance ministers have agreed the creation of a vanguard transaction tax bloc that will implement its... Read More

Is the time up for HFT?

Few can have missed the fact that Germany is set to go it alone on curbing HFT, although it looks like the rest of Europe won’t be too far behind. The proposed European legislation will insist upon a minimum resting time for orders before they can be amended or cancelled. This has sparked a fair amount of discussion here at Fidessa Towers on how it will (or probably won’t)... Read More

Social media and the return of high touch trading

The past decade has witnessed the wholesale electronification of global trading. The term “low touch” was coined to describe exactly this and the electronic routing of client orders to markets with the minimum of intervention from their broker. This meant that the value add of the sales trader was increasingly denuded and the key differentiators became simply cost and market... Read More

Whilst my breath is still warm

Good to see that the HFT community is finally starting to educate the regulators and policymakers. As we all know, the debate hinges on whether these firms are really acting as electronic versions of traditional market makers and, if they are, whether they should be subject to some of the same formal market making obligations. In particular, regulators have been gnashing their teeth... Read More

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