According to Ferber, the parties have agreed to introduce a minimum tick-size to limit high-frequency trading (HFT), testing and regulatory authorisation of algorithms and introducing circuit breakers on venues. “Currently, the area of high-frequency trading is lacking suitable regulation. This is why it was high time to find a decent solution to this pressing problem. Hence, I am very happy that during the trialogue session last Wednesday, the negotiation team achieved a significant breakthrough on this issue", Ferber said.
Meanwhile, the minimum tick-size rule, which would reduce pricing granularity and, according to Ferber, slow markets down and reduce systemic risks to market, is seen by some as underwhelming.
Despite concerns, Ferber believes the latest agreements are major milestones, which should enable trialogue discussions to be concluded soon. “This set of new rules will contribute to financial markets in Europe that will work more efficiently and more safely. Apart from that, the deal struck on Wednesday is a significant step towards reaching a common agreement on MiFID II by the end of the year", he said.
With European Parliament elections due to take place in May 2014, MEPs and the European Council have been scrambling to reach agreement on key legislation, including MiFID and the European market infrastructure regulation, before the Parliament breaks up to begin campaigning.
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