How does one define a previously un-definable topic such as High Frequency Trading (HFT)?

Sources close to the Commodity Futures Trading Commission (CFTC) indicate new thinking may be underway regarding the topic of High Frequency Trading (HFT). Speculation is this thinking could look at the relative market impact HFT may have in a given market move as a legal definition. Such a definition could consider the relative impact of a particular HFT player as a percentage of a market damaging move and could be used for potential CFTC action on the issue. This new thinking could be outlined sometime in March, sources said.

Current US regulation regarding HFT is considered by some market participants to be behind the curve relative to the European Union. In the EU, for instance, algorithm type is used as an identifier to determine market participant behavior during crisis conditions.

“There is significant uneasiness on the speed in markets,” noted Vassilis Vergotis, Executive Vice President, Head of Eurex, Americas.

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Mark H. Melin is author of several books, including High Performance Managed Futures and taught on the topic at Northwestern University’s Executive Education program

This entry was posted on Friday, March 1st, 2013 at 10:57 am and is filed under Commodities, Electronic Edge, Evil Speculators, Hedge Fund Research, Hedge fund strategies, Legal, Managed Futures, Quant Speak, Regulation, Risk Management, hedge fund performance, high-frequency trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.