Markets in Financial Instruments Directive (MiFID II): FAQ

Europe finally has agreed on the terms of MiFID II, extending its regulatory reach into fixed income, FX, OTC trading and blogcommodity speculation. Here are seven details you need to know as implementation begins.

We still have technical meetings to go through to finalize details, so the complete text is unlikely to be available until won or close to January 27, but here is what we understand so far:

1.  HFT will be restricted through greater testing of algorithms, but there will be no 500 m/s rule.

High Frequency Trading

The Bank of England has just released a new paper titled “High-frequency trading behaviour and its impact on market Sandy Traderquality: Evidence from the UK equity market” . The paper is similar to the recent Kirilenko study in that it separates ‘aggressive” and “passive” high frequency traders and it uses data which identifies the counterparties of each transaction.

Before we get into some of the specifics of the paper, it’s important to note how the Bank of England defines HFT:

“The term “HFT” is generally used Continue reading “High Frequency Trading”