REGULATIONS AND TECHNOLOGY BEHIND HFT LATENCY, BATCH AUCTIONS AND PAYMENTS FOR ORDER FLOW IN THE US AND EU
Journal Title: e-Finanse - Year 2018, Vol 14, Issue 2
Abstract
In recent years, there have been many discussions and analyses of how high-frequency trading may affect the financial market – but still without any clear conclusions. Leaving these opinions behind, many adjustments have already been made in the US and Europe - both to regulations and market rules, impacting not only High-Frequency Trading but general electronic trading as well. These rules and regulations are the result of technological developments in electronic trading and more specifically, High-Frequency Trading and the practice of Payments for Order Flow. The question remains as to how deep regulations should go, especially in the case of HFT which can be severely affected by harsh regulatory requirements or procedures. Because two of the most important issues in HFT are time and information, some of the rules and regulations affect aspects such as not only what type of information and how it should be gathered, but also clock synchronisation and time-stamp granularity. Another issue that may be considered controversial in the field of HFT (although it is not a practice limited to HFT) is Payment For Order Flows. Under this mechanism, wholesale market makers pay brokers for their client’s order flow – a practice that performed in great amounts and at high speeds may give a considerable level of “inside” information. Regulations, especially from ESMA (MiFID II). try in great part to thus mitigate the practice of Payments For Order Flows.
Authors and Affiliations
Carlos Jorge Lenczewski Martins
Keywords
Related Articles
- EP ID EP492752
- DOI 10.2478/fiqf-2018-0010
- Views 75
- Downloads 0
UNDERSTANDING FINANCIALIZATION: STANDING ON THE SHOULDERS OF MINSKY
Since Hyman Minsky’s death in 1996, much has been written about financialization. This article — by means of the synthesis, interpretation, and assessment of an extensive literature — explores the issues that Minsky exam...
PARTIAL FISCAL DECENTRALIZATION AND LOCAL GOVERNMENT SPENDING POLICY
The aim of this paper is to analyze how limits in revenue and spending autonomy of sub-sovereign governments influence their decisions. Revenue and spending autonomy indicators for Polish towns were established and used...
FINANCING OF SMART GROWTH IN LESS DEVELOPED REGIONS ON THE EXAMPLE OF POLAND
The aim of this paper is twofold. First, the smart growth concept is examined with a focus on challenges associated with applying this concept in the less developed regions. Second, the impact of EU structural funds on s...
INVESTMENT STRATEGIES THAT BEAT THE MARKET. WHAT CAN WE SQUEEZE FROM THE MARKET?
The paper presents a new approach to optimizing automatic transactional systems. We propose a multi-stage technique which enables us to find investment strategies beating the market. Additionally, new measures of combine...
Financialization and commodity market stability
Stability in supply of commodities is essential for manufacturing and doing business. This fact is unchangeable despite the passage of time and only the ways of trading of commodities differ. Especially in recent decades...