European politicians drafting tough new curbs on the controversial trading practice high frequency trading (HFT) have faced stiff resistance from the industry – especially the City of London.
The European Parliament plans to crack down on HFT through the revised Markets in Financial Instruments Directive (Mifid), which governs European financial markets. The first directive came into force in 2007, allowing financial exchanges to compete with one another. In the process it created new opportunities for HFT, then in its infancy.
The new draft legislation, Mifid 2, is based on proposals put forward by the European Commission last year. It tackles market issues ranging from regulating commodity markets to investor protection. But its most hotly debated proposals are its measures dealing with high frequency trading.
‘We’re still in a situation where HFT or algorithmic trading is one of the key disputes in parliament,’ said Philippe Lamberts, a Green MEP.