Over the past year we have seen a number of platforms in the OTC space change their rules in order to “create a more level playing field for participants”, to ensure they are not disadvantaged by those with ‘high speed trading platforms’ – ie the High Frequency Trading (HFT) firms.
In the OTC space we have seen two FX platforms that are seeking to ‘level the playing field’s’, by reducing access by High Frequency Firms.
Notably, EBS as part of their strategy to regain the support of major banks, changed pricing so the last digit moved in half pips rather than in tenths of a pip, and reduced the number of direct connections that high frequency firms can have to the EBS matching system.
Then we had ParFX, whose platform has a randomised pause to all order submissions, cancellations and confirmations. This firms liquidity by creating a genuinely level playing field for all participants regardless of location, technological sophistication or financial strength.
We covered both these platforms in EBS vs ParFX.
According to an article in WallStreet & Technology:
Canada’s dominant stock exchange operator – the TMX Group – has some new competition with a twist. The Royal Bank of Canada, Barclays and Investment Technology Group (ITG) and others have joined forces to form Aequitas Innovations, a new stock exchange that will limit the role of high frequency trading.
Full story here
According to Greg Mills, chairman of Aequitas and co-head of global equities within Royal Bank of Canada’s Cap Markets unit:
“Through Aequitas, we have a compelling opportunity to create a level playing field for both retail and institutional investors by challenging certain predatory high frequency trading strategies which have impacted the quality of existing equity markets,”
“certain predatory high frequency trading strategies have impacted the quality of existing equity markets,”
“Marketplaces in Canada and around the globe are increasingly out of sync with their traditional users as they attract and cater to volume and revenue-generating trading over traditional investors.”
Coverage by Bloomberg here