Europe nears agreement on HFT rules

The European Parliament has hammered out a preliminary deal with EU member states on how to regulate high-frequency trading.

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Europe nears agreement on HFT rules

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In a note seen by Reuters, Lithuania - which currently holds the revolving EU presidency - says that new rules have been "broadly agreed" as part of negotiations for MiFID II, which is expected to come into effect in 2016.

High-frequency trading has seen its popularity soar since the original Directive came into force and now accounts for around a third of all European exchange trading volumes.

The practice has caused consternation among lawmakers on both sides of the Atlantic thanks to several high-profile incidents, most infamously the May 2010 flash crash which saw the Dow Jones Industrial Average plummet.

According to Reuters, the parliament has backed down from its demand for a minimum resting period requiring orders to stay on an order book for 500 milliseconds.

However, circuit breakers will be brought in, traders will ne required to have their algorithms tested on venues and green-lighted by regulators, tick sizes will be harmonised and business clocks will be synchronised.

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