Indian regulator plans to make life difficult for high-frequency trading companies.
Indian regulator plans to make life difficult for high-frequency trading companies.
I bring to your attention the translation of an article from the site http://www.bloomberg.com/news/articles/2016-05-25/india-plans-rules-to-hobble-high-speed-trading-firms-advantage
As part of measures aimed at increasing control over automated trade, India’s trade regulatory authority plans to increase penalties for high-speed traders who literally flooded the exchange with their bids that do not lead to the conclusion of real transactions.
The Indian Securities and Exchange Board, or SEBI, is also considering the possibility of introducing a split-second transaction rate limit for ultra-fast strategies and minimal waiting time to delay the appearance of applications in the system so that all participants see market changes at the same rate, said UK Sinha CEO in Mumbai on Wednesday.
These proposals came against the backdrop of a growing chorus of voices calling on the regulator to take action against high-frequency traders who receive privileged access to the country's largest stock exchange. In its report, one of the advisory groups of SEBI recently called for a full investigation into possible collusion between the National Stock Exchange of India and one of the high-frequency trading companies. The report has described so far the only possible example of such a conspiracy among all the major world markets.
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“We took up systemic risks and examples of unfair access in high-frequency trading,” Sinha said in a statement. “We also ask the stock exchange to give guarantees that high-frequency traders will not abuse the system.”
Delay in execution of transactions
One of the proposals under consideration includes the separation of orders coming from servers located on the exchange itself, and the introduction of an auction system that reduces the advantages of the fastest traders. The broadcast of the book of applications is currently considered as a measure to ensure the absence of preferences in access speed, reports Sinha. The measures will be announced in the next three to four months, he said.
“We need to understand whether these changes will ultimately lead to the creation of uniform rules for all the games or they will impede the growth of the market,” said Manoj Nagpal, chief executive officer of Mumbai-based Outlook Asia Capital Pvt. Ltd., engaged in investment consulting and asset management. "Markets all over the world are struggling with the regulation of high-frequency trading without disrupting the operation of the entire system."
Regulators around the world have focused their efforts on preventing the machinations of traders who are trying to move prices by placing bogus orders, trying to find the most effective ways to manage automated trading markets. For every 27 applications placed on US exchanges, only one is executed, as shown by the data of the US Securities and Exchange Commission. In other words, approximately 96% of all applications sent to US stock markets were canceled.
Strong regulation
Indian company BSE Ltd. takes a commission of up to 0.1 rupee per application, while the ratio of orders to transactions ranges from 250 to 500, the website of the exchange reports.
“While SEBI is one of the first regulators trying to introduce some rules for high-frequency trading, there is a need to tighten regulation,” he said.
High-frequency and algorithmic operations in India currently account for 40% of the total - the largest share in developing countries and a large increase, compared to a few percent five years ago, says Daniel Tierney, senior analyst at Aite Group, a consulting company from Boston . SEBI, which issued extensive recommendations for high-frequency trading in 2012 and 2013, announced in December that it was considering new restrictions, but had not yet taken any action.
“We will soon issue a discussion paper on the whole range of these issues, and the final rules will be finalized after we take the recommendations from all interested parties,” Sinha said.
I bring to your attention the translation of an article from the site http://www.bloomberg.com/news/articles/2016-05-25/india-plans-rules-to-hobble-high-speed-trading-firms-advantage
As part of measures aimed at increasing control over automated trade, India’s trade regulatory authority plans to increase penalties for high-speed traders who literally flooded the exchange with their bids that do not lead to the conclusion of real transactions.
The Indian Securities and Exchange Board, or SEBI, is also considering the possibility of introducing a split-second transaction rate limit for ultra-fast strategies and minimal waiting time to delay the appearance of applications in the system so that all participants see market changes at the same rate, said UK Sinha CEO in Mumbai on Wednesday.
These proposals came against the backdrop of a growing chorus of voices calling on the regulator to take action against high-frequency traders who receive privileged access to the country's largest stock exchange. In its report, one of the advisory groups of SEBI recently called for a full investigation into possible collusion between the National Stock Exchange of India and one of the high-frequency trading companies. The report has described so far the only possible example of such a conspiracy among all the major world markets.
')
“We took up systemic risks and examples of unfair access in high-frequency trading,” Sinha said in a statement. “We also ask the stock exchange to give guarantees that high-frequency traders will not abuse the system.”
Delay in execution of transactions
One of the proposals under consideration includes the separation of orders coming from servers located on the exchange itself, and the introduction of an auction system that reduces the advantages of the fastest traders. The broadcast of the book of applications is currently considered as a measure to ensure the absence of preferences in access speed, reports Sinha. The measures will be announced in the next three to four months, he said.
“We need to understand whether these changes will ultimately lead to the creation of uniform rules for all the games or they will impede the growth of the market,” said Manoj Nagpal, chief executive officer of Mumbai-based Outlook Asia Capital Pvt. Ltd., engaged in investment consulting and asset management. "Markets all over the world are struggling with the regulation of high-frequency trading without disrupting the operation of the entire system."
Regulators around the world have focused their efforts on preventing the machinations of traders who are trying to move prices by placing bogus orders, trying to find the most effective ways to manage automated trading markets. For every 27 applications placed on US exchanges, only one is executed, as shown by the data of the US Securities and Exchange Commission. In other words, approximately 96% of all applications sent to US stock markets were canceled.
Strong regulation
Indian company BSE Ltd. takes a commission of up to 0.1 rupee per application, while the ratio of orders to transactions ranges from 250 to 500, the website of the exchange reports.
“While SEBI is one of the first regulators trying to introduce some rules for high-frequency trading, there is a need to tighten regulation,” he said.
High-frequency and algorithmic operations in India currently account for 40% of the total - the largest share in developing countries and a large increase, compared to a few percent five years ago, says Daniel Tierney, senior analyst at Aite Group, a consulting company from Boston . SEBI, which issued extensive recommendations for high-frequency trading in 2012 and 2013, announced in December that it was considering new restrictions, but had not yet taken any action.
“We will soon issue a discussion paper on the whole range of these issues, and the final rules will be finalized after we take the recommendations from all interested parties,” Sinha said.
Source: https://habr.com/ru/post/303818/
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