In a letter to Andrew Tyrie dated 19 September 2014, the FCA’s CEO, Martin Wheatley, has expressed the regulator’s concern with high-frequency trading (“HFT”) and dark pools. Mr Wheathley has confirmed that the FCA is looking to implement provisions in the new MiFID II, which would preserve the integrity of the market and alleviate the risks posed by HFT and dark pools.
The regulator is currently assessing the risks posed by the above-mentioned practices through ongoing supervision and surveillance and analysis led policy-making. HFT has proved to be a major issue for regulators globally and it is for this reason that the FCA is also supporting the work of ESMA Secondary Markets Standing Committee through its chairmanship. One of the committee’s aims is formalizing HFT regulation and providing guidelines for HFT firms, the new MiFID II will seek to address both matters. ESMA has also previously expressed its concern towards a possible linkage between HFT and market abuse, however the issue still remains under consideration.
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