EU proposes crackdown on high-frequency traders

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The European Union has proposed a crackdown on the high-frequency traders many suspect of exaggerating market swings as part of a wider shakeup of securities rules that will also hit commodity speculators. The move comes as the European Commission, which writes EU law, pursues radical financial reform after sagging interest has been revived recently by a worsening sovereign debt crisis and public protests from London to Frankfurt. The new rules, if they come into force, will demand that high-frequency traders buy and sell shares or other securities at around the price the market is trading. Officials say this will stop traders entering and exiting the market with large orders that far exceed or undershoot normal prices in the hope they will make a quick profit from the volatility that follows.

The rules, will essentially stop traders that use algorithms — a computerized set of trading instructions — from going against the tide of the market.

National Post - October 2, 2011

Hopefully some similar OSC action will follow….

Cheers,

durban1