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High-frequency trading

High-frequency trading

High-frequency trading (HFT) is a new, much discussed trading technology allowing securities transactions to be executed via independently acting, extremely quick high-performance computers. The technology was developed in the course of the progressing technological evolution of the financial markets. It significantly contributes to the increase of liquidity in securities trading as well as to the reduction of spreads. The improved price quality also benefits companies through lower financing costs. High-frequency trading thus plays a major role in efficient and functioning capital markets and bears economic benefits.

However, as with other technological innovations, certain risks such as increased volatility, market manipulations or technical errors cannot be excluded. Deutsche Börse Group effectively counteracts these risks posed by high-frequency trading through comprehensive safety measures such as plausibility checks and circuit breakers, thereby safeguarding proper conduct of trading. Additional regulatory measures which contribute to the minimisation of these risks should be supported by all means. High frequency trading is regulated in Germany since 15 May 2013 by the high-frequency trading act. On a European level the issue will be discussed in the context of the revision of the Markets in Financial Instruments Directive, MiFID II.