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10/04/2011

High-Frequency Traders May Face Tougher EU Market-Abuse Rules

By Jim Brunsden
Sept. 13 (Bloomberg) -- The European Union is considering
listing “specific examples of strategies using algorithmic
trading and high-frequency trading” that should be banned and
punished by regulators as market manipulation.
The measures to increase investor protection and reduce
volatility are part of plans to clamp down on market abuse in
the European Union, according to a draft of the proposals
obtained by Bloomberg News.
“There are particular automated strategies that have been
identified by regulators which, if carried out, are likely to
constitute market abuse,” the document says. “Further
identifying abusive strategies will ensure a consistent approach
in monitoring and enforcement by competent authorities.”
High-frequency traders have come under increased
regulatory scrutiny following the so-called flash crash in May
last year, during which the Dow Jones Industrial Average briefly
lost almost 1,000 points.
Michel Barnier, the EU’s financial services chief, has said
the tougher market-abuse rules are needed because current
sanctions are too weak.
Under the proposals, regulators would get the power to set
maximum fines for financial services companies of at least 10
percent of their annual sales. Individual traders would face
fines of at least 5 million euros ($6.8 million) for the worst
infractions.
Traders found guilty of “intentionally” engaging in
insider dealing and market manipulation should face criminal
sanctions that are, “effective proportionate and dissuasive,”
according to the draft rules.
Under the plans, which would need approval from governments
and members of the European Parliament, unsuccessful attempts to
manipulate markets should also be punished.

The above is a Bloomberg article.

Europe is talking about hefty fines and criminal charges to traders abusing the system through the use of high frequency trading. The criminal aspect of this methodology is clear but have been ignored by the regulators in the US where it originated. The unwillingness of Congress/Senate to pass laws to rein in the destructiveness of high frequency trading is criminal, and understandable given the incestuous relationship between the law makers and the banksters.

Europe is slightly away and could be relied upon, relatively, to take actions against the rogue part of high frequency trading. Regulators who slept with the devil will dance with the devil and protect the devil. Hoping that the Americans will take action earlier is not going to happen and Europe may be the saviour to this menace.

9 comments:

Anonymous said...

Who is going to regulate the regulators who regulate the manipulators?

Just like who is rating the rating agencies that rated the failed investment instruments?

Or are they going to be the same specie of pigs drinking from the same trough?

Just another attempt to pull wool over investors eyes?

Enough is enough. Trust yourself.

Anonymous said...

There must be some glaring evidence for them to talk about criminal charges. It is only a matter of time. Hope the regulators too will be charged in due course for abetting and negligence.

Anonymous said...

A small market is oredy precarious. Then you let in the big funds who can move market up and down when there are no big players to counter their destructive actions. then you let them use high speed computers to facilitate their killings.

What kind of irresponsibility is this? Destroy the stock value, destroy the market.

Anonymous said...

Home / Opinion / Chen Weihua US media blackout of protest is shameful
Updated: 2011-09-30 08:17By Chen Weihua (China Daily)

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One of the best-kept secrets in the United States over the past two weeks seems to be the protest on and near Wall Street in New York.

More than 1,000 people protested on the first day, September 17, marching and chanting slogans. Yet the demonstration, known as Occupy Wall Street, did not appear on the major networks' evening news or in major newspapers the next day.

The protest, now in its 14th day, only got limited coverage last Saturday when heavy-handed police arrested close to 100 people and pepper-sprayed several female demonstrators. But most coverage that day was not in-depth.

While there are many videos of harsh police action on the Internet, I have witnessed how the formerly helpful police patrolling the streets have suddenly resorted to force in Zuccotti Park, also known as Liberty Plaza, in Lower Manhattan.

In one scene, several policemen jumped on one skinny man who was not acting violently. They pushed him down and handcuffed him. Just five minutes later, a policeman waved his fist at a man. That day, seven people were arrested, with one suffering a serious leg injury.

Again, none of these incidents made the major networks' evening news or the major newspapers.

As a journalist, I have wondered why the so-called mainstream US media, which is either headquartered in New York or maintains a strong presence in the city, has chosen to ignore the prolonged demonstration since it started. Why have those journalists, who made their names covering various protests around the world, suddenly become silent in reporting the mass rally? That clearly does not match their enthusiasm to cover demonstrations in recent months in places such as North Africa and the Middle East.

The people who come from many parts of the US and the dozens of people who have spent rainy nights in the outdoor plaza would, no doubt, have countless stories to tell. But few journalists from the mainstream media seem interested in listening this time.

To some protesters I have talked to, the answer is simple: It is natural that corporate-controlled media outlets are not going to cover a protest that is fighting excessive corporate influence in society.

One US journalist said it was because these people are too left-leaning and do not seem to have a clear goal for their rally. I am not sure if they are all left-leaning, but a schedule I saw did include sessions on the Communist Manifesto and Spanish Revolution.

Still, that does not justify a blackout imposed by the major news media outlets on such a prolonged protest.

In fact, the message from the protesters is quite clear. They are against corporate greed and influence in American politics, economy and life. These protesters, who call themselves "The 99 Percent", are angry about the huge amount of wealth collected by the top 1 percent of the population.

Vanity Fair has reported that the top 1 percent of the nation controlled 12 percent of US wealth only 25 years ago, while today it controls close to 25 percent.

Isn't that a serious concern for journalists, whose primary responsibility is to speak for the voiceless in their society?

It is a shame that most so-called mainstream media outlets have miserably failed to inform the public over the past two weeks.

The author, based in New York, is deputy editor of China Daily USA. E-mail: chenweihua@chinadaily.com.cn


(China Daily 09/30/2011 page8)

Anonymous said...

The Americans trying to cover their backside from the world.

Anonymous said...

Chinese says 'paper cannot wrap fire' (zi pao bu zhu huo). They were afraid more will participate when they become aware of the protests.
Anyway, the World can expect more Americans to learn from the Arabs.

patriot

hft said...

This article is the great source of information for sharing very useful and interesting facts about high frequency trading which are very useful for all the traders who are new in high frequency trading..The knowledge of this information is very beneficial for the high frequency traders..

Chua Chin Leng aka redbean said...

Hi hft, welcome to the blog.

More people must be educated on the dangers of HFT and stop it before more are robbed of their money.

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