Regulators “can’t stop HFT”, it’s up to the exchanges – says panel

Aquis Exchange’s Alasdair Haynes said controlling HFTs is a difficult task for regulators.

Regulators cannot stop the ‘manipulative’ behaviour of HFTs and it is up to exchanges to ban them, according to panellists at The Trade’s MiFID II event in Frankfurt earlier this week.

Chief executive officer at Aquis exchange, Alasdair Haynes, explained that Aquis had banned aggressive proprietary trading earlier this year as it “damaged liquidity” and “hurt the asset manager in the long-term.”

Haynes added: “Regulators cannot stop the behaviour taking place as they are not doing anything illegal, the only way is for exchanges to take action.

“It’s tough for the regulator but easier for the exchange.”

Vassiliki Veliou, head of market structure and regulation at Eurex Exchange, explained the definition of HFTs in the recently published delegated acts was too loose.

She said: “You can always bend a certain behaviour to trigger criminal effect, and the looser the definition the harder it is.

“If you define it, then you can control it. It’s wrong to conclude the HFTs are all manipulators, you could be the slowest trader in the world and still manipulate markets.”

Haynes countered by explaining that the exclusion of aggressive proprietary trading helps make the market a better place.

He said: “We understand exchanges need to be fair but when you ban aggressive trading activities you make the market a better place for everybody. Since we took action we've seen a doubling of market share and improved quality of liquidity.”