Bloomberg News

Exchanges Need Controls for High-Frequency Trading, IOSCO Says

October 20, 2011

Oct. 20 (Bloomberg) -- Trading venues should take steps to curb “risks posed to the financial system” by high-frequency and algorithmic trading, the International Organization of Securities Commissions said.

Exchanges and other venues should be able to impose emergency stops to automatic trading when market volatility surpasses a certain threshold, IOSCO said in a statement on its website today.

“All order flow of trading participants, irrespective of whether they are direct venue members or otherwise, must be subject to appropriate controls,” IOSCO said.

Such measures would “take speed out of the market to be able to determine if orders which could move the market dramatically are legitimate (e.g. no error trades) ensuring that the price formation process is orderly,” IOSCO said.

Madrid-based IOSCO brings together national market regulators from more than 100 countries to coordinate rules and share information.

--Editors: Peter Chapman, Jones Hayden

To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.


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