Europe's exchanges have voiced their concerns that broker crossing networks are not being subjected to the same level of scrutiny as traditional bourses in the current debate on regulating automated trading.
With high-frequency trading high on the regulatory agenda in the wake of last May's US flash crash, the European Securities and Markets Authority (Esma) is currently working on a set of guidelines on the issue that will become part of MiFID II.
In its response to Esma's consultation paper on systems and controls, the Federation of European Securities Exchanges (Fese) comes out strongly in favour of HFT but "welcomes this opportunity to outline the provisions taken by its members to foresee potential problems and the tools that they have put in place to safeguard against them".
However, the federation notes what it calls the "limited scope" of the consultation, and its concentration on lit markets and regulated dark trading venues, ignoring HFT in the OTC space, facilitated by broker crossing networks.
"Any regulatory approach focusing on specialized players alone risks (i) to undermine a level playing field and (ii) exclude a relevant part of HFT strategies," says Fese.
The complaint is part a wider concern among exchanges that MiFID is placing them under greater scrutiny than other venues used to trade.
Earlier this year the body hit out at plans to make banks change their private trading systems to formal venues as part of MiFID II, arguing that the move does not go far enough and all platforms should come under the same framework.
Read the full response to Esma's consultation here:
Download the document now 325.3 kb (PDF File)