The European Union (EU) may introduce new rules to limit and punish market abuse in high-frequency trading and algorithmic trading, Bloomberg reports. The EU is seeking to list specific examples of strategies using algorithmic trading and high-frequency trading that should be banned and punished by regulators as market manipulation.
Under the proposals, which will require approval from governments and members of the European Parliament, regulators will be able to set maximum fines for financial services companies of at least 10 percent of their annual sales. The European Commission is focusing on “layering”, in which traders place large orders they have no intention of allowing to go through, and quote stuffing, in which investors seek an advantage by delaying data feeds.
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