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High-frequency trading

High-frequency trading (HFT)

High-frequency trading (HFT) is a much discussed algorithmic trading technology allowing securities transactions to be executed via extremely quick high-performance computers. The technology was developed in the course of the progressing technological evolution of the financial markets.

Objective

HFT is an important component of electronic markets. HFT participants provide liquidity to markets, dampen volatility and reduce total transaction costs.

HFT also significantly contributes to the reduction of spreads. The resulting improved price quality also benefits companies through lower financing costs. HFT thus plays a major role in efficient and functioning capital markets and has economic benefits.

However, as with other technological innovations, certain risks such as increased volatility, market manipulations or technical errors cannot be ruled out. Deutsche Börse Group effectively counteracts these risks 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 expressly be supported.

Time line

In Germany, HFT has been regulated by the German High-Frequency Trading Act since 15 May 2013. On a European level the issue will be discussed in the context of the revision of the Markets in Financial Instruments Directive (MiFID II).

HFT: the highlighted parts of the value chain are affected

Video: high-frequency trading ... in simple terms

explainity.com explains "High Frequency Trading"

 

High-frequency trading act

IT

Find an overview of a number of key elements of the German High-frequency Trading Act here.

Eurex Exchange: HFT connectivity alternatives

Eurex

Eurex Exchange offers various connectivity alternatives designed to meet the needs of high-frequency firms. These popular interfaces provide exchange participants with flexible, low-latency access to Eurex Exchange.

Legal basis

Find the most recent publication on this regulation here. [German]