High-frequency trading is becoming a topic of hot debate; while some fund managers consider high-speed traders as a threat, others see them as beneficial to markets.
The Washington Post says the opposing viewpoints of advisors and execs “hint at the dilemma facing regulators as they try to determine whether to rein in high-frequency trading, which now accounts for at least half of all trading activity on U.S. exchanges.”
Indeed, regulators have been focusing heavily on high-speed trading since this past June. IIROC is trying to determine whether companies with high order-to-trade ratios should be flagged as possible market manipulators due to the effect of rapidly placing and cancelling of orders.
And yesterday, IIROC issued the latest proposed amendments to the trading rules relating to third-party electronic access to marketplaces.
The proposed rule changes build on electronic trading provisions proposed by regulators this past June. They provide a framework to govern three distinct types of third-party electronic access, which includes order execution for retail clients.
Recent reports suggest faster trading doesn’t benefit the average investor, due to drawbacks such as increasing fees and a higher chance of major market malfunctions that chip away at their confidence.