High Frequency Trading and Circuit Breakers in the EU

2018 ◽  
pp. 308-331
Author(s):  
Steffen Kern ◽  
Giuseppe Loiacono
Keyword(s):  
High Frequency ◽  
Financial Stability ◽  
Investor Protection ◽  
Legal Framework ◽  
Regulatory Framework ◽  
High Frequency Trading ◽  
Circuit Breakers ◽  
Market Order ◽  
Securities Trading ◽  
The Eu

This chapter reviews the fundamental workings of the EU regulatory framework and its implications for high frequency trading (HFT) and the latest findings on the market realities in the EU. Over the last decade, securities trading landscapes have undergone significant change, with the emergence of HFT being one of the most important developments in this context. At the same time, the EU has made landmark legislative advances with the aim of increasing investor protection, market order, and financial stability, and of containing risks in those areas. As the new MiFID2 legal framework takes effect, a wealth of new data and evidence will become available in coming years that will improve understanding of HFT patterns, the effectiveness of circuit breakers, and their optimal calibration.

Global Algorithmic Capital Markets

2018 ◽  
Keyword(s):  
Public Policy ◽  
Capital Markets ◽  
Systemic Risk ◽  
High Frequency ◽  
Investor Protection ◽  
High Frequency Trading ◽  
Market Making ◽  
Market Governance ◽  
Policy Objectives ◽  
The Impact

This book illustrates and assesses the dramatic recent transformations in capital markets worldwide and the impact of those transformations. ‘Market making’ by humans in centralized markets has been replaced by supercomputers and algorithmic high frequency trading operating in often highly fragmented markets. How do recent market changes impact on core public policy objectives such as investor protection, reduction of systemic risk, fairness, efficiency, and transparency in markets? The operation and health of capital markets affect all of us and have profound implications for equality and justice in society. This unique set of chapters by leading scholars, industry insiders, and regulators sheds light on these and related questions and discusses ways to strengthen market governance for the benefit of society at large.

High-Frequency Trading and its Role in Fragmented Markets

2017 ◽  
Vol 32 (3) ◽  
pp. 283-296 ◽  
Author(s):  
Martin Haferkorn
Keyword(s):  
Market Efficiency ◽  
High Frequency ◽  
Efficient Market Hypothesis ◽  
High Frequency Trading ◽  
Electronic Market ◽  
Coordination Costs ◽  
Major Transformation ◽  
Securities Trading ◽  
Term Analysis

Securities trading underwent a major transformation within the last decade. This transformation was mainly driven by the regulatory induced fragmentation and by the increase of high-frequency trading (HFT). On the basis of the electronic market hypothesis, which poses that coordination costs decline when markets become automated, and the efficient market hypothesis in its semi-strong form, we study the effect of HFT on market efficiency in the European fragmented market landscape. In doing so, we further incorporate the realm of financialization, which criticizes the increase in transaction speed. By conducting a long-term analysis of CAC 40 securities, we find that HFT increases market efficiency by leveling midpoints between Euronext Paris and Bats Chi-X Europe. On the basis of a crosscountry event study, we analyze the effect of the German HFT Act. We observe that the midpoint dispersion of blue chip securities between the two leading venues Deutsche Boerse and Bats Chi-X Europe increased. We conclude that HFT increases market efficiency in the European market landscape by transmitting information between distant markets.

scholarly journals THE APPLICATION OF THE PERSONAL IDENTIFICATIONAL NUMBER FOR EU CITIZENS RESIDING IN THE REPUBLIC OF BULGARIA - PRACTICAL ASPECTS

2020 ◽  
Author(s):  
Michal Stojanov ◽  
Keyword(s):  
Legal Framework ◽  
Regulatory Framework ◽  
Administrative Services ◽  
The Republic ◽  
The Eu

Bulgaria's membership in the EU is accompanied by the formation of innumerable bene-fits and commitments that the country receives as inevitable effects of its integration. Participa-tion in the EU is a prerequisite for improvement and supranational unification in the regulation of certain elements in the national legal framework and in the organization of administrative services in the country. However, for more than a decade there have been areas in which the established regulatory framework is not adequately reflected in the work of the Bulgarian ad-ministrative structures. The paper examines the application of the identifier Personal Number for EU citizens permanently residing in the Republic of Bulgaria, where it is found that it is insuffi-ciently applied, which results in bad practices and practical difficulties.

scholarly journals The EU Bank Resolution Framework: Institutional Changes of the Financial Safety Net in Poland and the Czech Republic

2019 ◽  
pp. 201-214
Author(s):  
Michal Janovec ◽  
Anna Jurkowska-Zeidler
Keyword(s):  
Czech Republic ◽  
Financial Market ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Current System ◽  
Safety Net ◽  
Legal Framework ◽  
The Czech Republic ◽  
Financial Safety Net ◽  
The Eu

In response to the global financial crisis, fundamental changes have been made at the European level to the legal framework of single financial market reg ulation and super vision. One of the significant legal steps was the establishment of a common system of recovery and resolution of failing banks. Within the framework of a systemic approach to the EU financial market, the article illustrates the steps taken towards the implementation of the resolution framework into domestic financial markets of Poland and the Czech Republic. The core content of the article is comparison of the role and location of the Polish and Czech resolution authorities in the architecture of the national safety net. The main aim of the contribution is to confirm or disprove a hypothesis that the legal framework of the resolution is a complementary element of financial safety net at the financial market, making it necessary to redefine the role of individual institutions that form the current system of ensuring financial stability in Poland and the Czech Republic. The scientific methods of analysis, synthesis, and comparison have been employed.

European Legal Framework for Algorithmic and High Frequency Trading (Mifid 2 and MAR)

2018 ◽  
Vol 9 (1) ◽  
pp. 146-153 ◽  
Author(s):  
Tilen ČUK ◽  
Arnaud VAN WAEYENBERGE
Keyword(s):  
Mathematical Modelling ◽  
Systemic Risk ◽  
High Frequency ◽  
Financial Innovation ◽  
Legal Framework ◽  
Computer Hardware ◽  
High Frequency Trading ◽  
Computer Algorithms ◽  
Early Assessment ◽  
Market Abuse

AbstractAlgorithmic and high frequency trading use computer algorithms to execute strategies and the confluence of trends in computer hardware, programming, mathematical modelling, and financial innovation have pushed the limits of trading speed to unprecedented levels. Algorithms are fast and automatically spread disruptions through the financial system. Over the last decade, the ensuing systemic risk called for new regulations. This article attempts an early assessment of the new European legal framework (Mifid 2 and Market Abuse Regime) intended to tackle the technological risks of the modern trading paradigm.

3. Prudential Regulation II: Structural Reform, Deposit Insurance, Corporate Governance

2018 ◽  
Author(s):  
Ross Cranston ◽  
Emilios Avgouleas ◽  
Kristin van Zweiten ◽  
Theodor van Sante ◽  
Christoper Hare
Keyword(s):  
Corporate Governance ◽  
Financial Stability ◽  
Deposit Insurance ◽  
Legal Framework ◽  
Structural Reform ◽  
Reform Legislation ◽  
Clearing And Settlement ◽  
The Usa ◽  
The Uk ◽  
The Eu

This chapter discusses bank structural reform. Most structural reform initiatives that have been undertaken since 2008 were aimed at reversing the effects of the repeal of the Glass–Steagall Act in the late 1990s and of the EU legislation that promoted universal banking. The chapter first considers the financial stability concerns and the mechanics of contemporary structural reform legislation in the USA, the UK, and the EU, and the actual legal framework underpinning these reforms. It then covers the regulation of bank involvement in derivatives markets. Today, derivatives regulation is a clear part of macroprudential regulation to the extent that centralized clearing and settlement and increased transparency battle opacity and interconnectedness and limit systemic risk. The remainder of the chapter covers deposit insurance, bank corporate governance, risk control, and executive remuneration.

scholarly journals Financial Regulation: Still Unsettled a Decade After the Crisis

2019 ◽  
Vol 33 (1) ◽  
pp. 61-80 ◽  
Author(s):  
Daniel K. Tarullo
Keyword(s):  
Financial Stability ◽  
Financial Regulation ◽  
Legal Framework ◽  
Regulatory Framework ◽  
The Political ◽  
Shadow Banking ◽  
Unfinished Business ◽  
Short Term ◽  
The Us ◽  
The Moment

A decade after the darkest moments of the financial crisis, both the US financial system and the legal framework for its regulation are still in flux. The post-crisis regulatory framework has made systemically important banks much more resilient. They are substantially better capitalized and less dependent on runnable short-term funding. But the current regulatory framework does not deal effectively with threats to financial stability outside the perimeter of regulated banking organizations, notably from forms of shadow banking. Moreover, with the political tide having for the moment turned decisively toward deregulation, there is some question whether the resiliency improvements of the largest banks will be preserved. This article assesses the accomplishments, unfinished business, and outstanding issues in the post-crisis approach to prudential regulation.

A new regulatory framework for extra-judicial consumer redress: where we are and how to move forward

Legal Studies ◽  
2015 ◽  
Vol 35 (1) ◽  
pp. 114-141 ◽  
Author(s):  
Pablo Cortés
Keyword(s):  
Dispute Resolution ◽  
Alternative Dispute Resolution ◽  
Legal Framework ◽  
Third Parties ◽  
Regulatory Framework ◽  
Online Dispute Resolution ◽  
Minimum Standards ◽  
Voluntary Compliance ◽  
Primary Contribution ◽  
The Eu

This paper examines the new legal framework on consumer Alternative Dispute Resolution (ADR) in the EU. Its primary contribution lies in identifying that harmonising the complaint submission in a pan-European Online Dispute Resolution (ODR) platform, and directing parties to nationally approved ADR entities that comply with minimum standards, will not fulfil the potential of an extra-judicial consumer redress system. This paper proposes key functions that the ODR platform should incorporate if it is to provide effective redress. This paper also argues that a successful ODR platform should include built-in incentives that encourage parties to: (i) participate in approved ADR processes; (ii) settle complaints with little or no intervention from neutral third parties; and (iii) ensure voluntary compliance with final outcomes.

scholarly journals Insurance-Based Investment Products: Regulatory Responses and Policy Issues

2020 ◽  
pp. 113-135
Author(s):  
Michele Siri
Keyword(s):  
Investor Protection ◽  
Regulatory Framework ◽  
Member States ◽  
Protection Measures ◽  
Policy Issues ◽  
Current Regime ◽  
Gold Plate ◽  
Recent Reform ◽  
National Competent Authorities ◽  
The Eu

AbstractThe chapter aims to analyse the recent reform of the EU regulatory framework as regards insurance-based investment products (IBIPs). The current regime provided for IBIPs offers stronger protection to all customers, regardless of the channel of distribution. In line with the EU plan to provide consistent cross-sectorial investor protection across all Member States, many IDD provisions are based on the corresponding MiFID II rules, even though some differences remain and should be further elaborated in connection with the inconsistencies, overlaps and gaps in the investor protection as far as the distribution of the IBIPs is concerned. Furthermore, several Member States have exercised the discretions recognised by the IDD as regards IBIPs mainly to gold plate investor protection measures. However, such an uncoordinated approach undermines the internal market’s objectives. Therefore, the chapter advises EIOPA to use its powers to coordinate Member States’ measures and ensure transparency about National Competent Authorities’ measures in this respect.

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