Does this seem murky? It appears to me to be a method of shutting down
the trades so a /company/ does not get into the same bind as the example
"Knight Capital Group" mentioned below. Slowing the trading may be good
(for some) but still no mention of taxing the system. And the .5% tax
thrown around in the past is not enough. If HST is at 12%, is that where
it should be? Hey. At least 2%. I feel if one wants to slow these sorts
of trades then the higher the tax per trade, the slower the turnover on
trades will be.
D.
On 26/09/2012 6:47 AM, Arthur Cordell wrote:
Germany Acts to Increase Limits on High-Speed Trades
* /by/ MELISSA EDDY and JAMES KANTER
* Sept. 25, 2012
*
http://www.nytimes.com/2012/09/26/business/global/germany-wants-rules-on-superfast-stock-trading.html?nl=todaysheadlines&emc=edit_th_20120926&moc.semityn.www
*
BERLIN --- *Germany intends to be one of the first countries to try to
put the brakes on high-frequency trading
<http://topics.nytimes.com/top/reference/timestopics/subjects/h/high_frequency_algorithmic_trading/index.html?inline=nyt-classifier>,
the computer-driven force that has been rattling stock markets across
the globe. *
Chancellor Angela Merkel's government approved draft legislation on
Wednesday that foresees imposing additional controls on such trading.
The proposed measures include requiring that all high-frequency
traders be licensed, requiring clear labeling of all financial
products traded by powerful algorithms without human intervention and
limiting the number of orders that may be placed without a
corresponding trade. Traders who violate the limits, which would be
set once the law took effect, would face a fine.
"Computer-generated algorithmic transaction involves a variety of new
risks," Germany's finance ministry said in a statement. "Germany is
reacting to these risks with legislation that will create more
transparency, security and a better overview."
*The legislation, which is subject to approval by both houses of
Parliament, was written with an eye toward similar legislation being
discussed in Brussels that could eventually apply across the European
Union, which has 27 member nations, the official said. *
Steps to pass the broader legislation on high-frequency trading are
expected to proceed Wednesday, when the influential Committee on
Economic and Monetary Affairs of the European Parliament will vote on
how to update the law that governs securities trading to take account
of new technologies.
The Europeans are not alone in their concern about high-speed
computerized trading, which has led to several notorious market
disruptions in recent years.
The latest occurred in early August in the United States, when
problems with newly installed software caused the Knight Capital
Group, a New Jersey broker that specializes in computer-driven
trading, to lose $440 million. The problem led Knight's computers to
rapidly buy and sell millions of shares in more than 100 stocks for
about 45 minutes after the markets opened on a Wednesday. Those trades
pushed the price of many stocks up, and Knight lost money when it had
to sell the shares back into the market at a lower price the next day.
The Knight episode raised alarms on Wall Street and in Washington, but
no new curbs have yet been proposed for high-frequency trading in the
United States.
*In Berlin, German officials have acknowledged that the technological
advances of recent years have led to irrevocable changes in the nature
of trading and that the fast pace must be accepted. By adopting
tighter controls, they say they hope to protect the interests of all
market participants. *
The German draft legislation "is deliberately arranged so that the
Finance Ministry has the capability of making things more precise
through provisions, and the stock markets are required by the law to
be aware when the next trick from high-frequency traders pops up,"
said a German government official who spoke anonymously on Tuesday.
While high-frequency trading firms are unlikely to welcome tighter
rules, Deutsche Börse, the main German stock exchange, based in
Frankfurt, said it would welcome the greater supervisory powers that
regulators would have under the proposed law.
"It is good for all parties acting on the German financial market that
we now have legal certainty how to deal with high-frequency traders,"
the exchange said last week.
The European legislation under discussion, if approved in committee,
is expected to become the basis for talks between representatives from
the European Parliament and individual governments. Upon completion of
that process, the draft measure would need the approval of the full
European Parliament and all 27 of the European Union's members before
becoming law.
The legislation would seek even tighter controls on fast trading than
the German proposal. Among the most closely scrutinized aspects of the
European measure are rules aimed at limiting the ability of
algorithm-driven trading to exaggerate volatility in financial markets.
Markus Ferber, the lawmaker appointed by the European Parliament to
report on the proposal, has recommended including rules to slow
trading by a half-second, require all trading venues to institute ways
to halt trading immediately and make it more expensive for traders to
cancel large volumes of orders.
Those rules were needed to "curb mere volumes brought by
high-frequency trading" and "to restore genuinely liquid, orderly and
fair markets," said Benoît Lallemand, a senior research analyst at
Finance Watch in Brussels. "Only such markets can serve the real
economy."
Mr. Lallemand said he expected the committee to approve Mr. Ferber's
recommendations on Wednesday. "The focus then should be that
governments come up with an equally ambitious proposal," he said,
though he said the legislation still could be watered down.
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