The UK Treasury is trying to water down attempts by EU legislators to impose tough limits on the fiendishly complicated trading systems that generate a significant slice of trading on Europe's stock exchanges. The bureau spoke to six MEPs from a range of parties and found broad parliamentary agreement on reforms including introducing "circuit breakers" that halt trading at large, sudden movements in prices and limiting the number of orders that traders cancel – an idea said to be gaining ground.
Sharon Bowles, the Liberal Democrat chair of the European parliament's powerful economic affairs committee, which is steering the HFT proposals, said: "The jury's still out on whether high-frequency trading does anybody any good, and as more quite significant fund managers and others say they don't want it, it may be that it disappears".
"There are some systemic risks that need to be addressed", said Kay Swinburne, a Conservative MEP and former investment banker, who warned that European markets were not immune from the sudden shocks that have hit US markets. "The flash crash could happen here: our system's automatic stops would kick in automatically so it wouldn't be as dramatic, but we could still have a 10 per cent drop before the circuit breakers kick in."
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