China’s Shanghai Stock Exchange (SSE) has revealed it will impose new measures to counter speculation on its exchange, including imposing trading limits on high-frequency trading (HFT) firms that cancel a high proportion of their orders.
Without releasing timing details, the exchange said it would impose trading limits on firms engaging in “abnormal trading behaviours” such as making orders in a large sum or at high prices, or conducting frequent false orders and withdrawals. Firms identified as consistent offenders will be branded as unqualified investors and subject to punishment by the China Securities Regulatory Commission.
In a report entitled 'Four Categories of Speculation: The Reasons for Long-term Market Downturn and Investors' Loss', SSE identified new shares speculation, small-cap stocks speculation, underperformed stocks speculation and frequent trading as problems it will target in the clampdown.
High-frequency traders often send out large volumes of orders, cancelling the majority. Several markets in Europe, including Borsa Italiana and Deutsche Börse, are already either implementing or planning restrictions on HFT firms that cancel a high proportion of their orders.