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On Tuesday, the Commodity Futures Trading Commission convened its technology advisory group, consisting of agency officials and industry members, to discuss definitions. Trade groups made their own proposals.
The stakes over the definition are high. If regulators define it broadly, groups such as investment banks and traditional asset managers who use automated trading programmes that send and cancel bursts of orders to the market coudl be tagged as "high-frequency” traders.
But if it is defined narrowly, some proprietary shops could be subject to harsh rules that put them at a disadvantage.
Sensitivity over how regulators define high-frequency trading (HFT) has already been seen in Europe, where a proposal by the European Commission that automated traders be required to make markets at all times, regardless of market conditions, has raised eyebrows.
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