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London : FSA and SEC roundtable discussion on market structures

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FSA managing director Martin Wheatley and US Securities and Exchange Commission (SEC) chairman Mary L Schapiro have jointly held a roundtable discussion in London with global regulators on market structures.

The roundtable was attended by markets and securities regulators from Europe, the Americas, Asia and Australia.

The roundtable focused on a number of market structure issues specifically automated trading strategies such as high frequency trading (HFT), market fragmentation and undisplayed liquidity (for example, “dark pools”). The meeting also discussed the appropriate approaches regulators might adopt in the light of these market structure developments.

There were extensive discussions on all aspects of HFT, which noted the positive and negative effects of HFT; impact on market liquidity and market efficiency; the potential for market abuse and the impact on long-term investors. The meeting also highlighted the need for global coordination on regulatory approaches to HFT.

Further areas of discussion focused on the impact of market fragmentation, particularly the benefits and consequences of the growth of alternative trading venues as well as analysis of the impact of undisplayed liquidity.

Martin Wheatley said:

“The meeting provided an opportunity for regulators from around the globe to discuss vital markets structure issues, particularly the impact and role of high frequency trading. The meeting allowed for the sharing of useful information between the regulators and will contribute to a sound basis for continued work to be done at a global level.”

SEC chairman Schapiro said:

“The rapid developments in trading technologies and trading platforms have had a profound impact on the evolution in the structure of markets around the world.  This roundtable provided an important opportunity for regulators to share their experiences and their views on these developments. Cooperation among regulators at an international level is increasingly vital in ensuring the safety and soundness of our markets and protecting investors, and the meeting was a tremendous success in advancing such cooperation on market structure issues.”

The meeting laid the groundwork for future discussions on these issues, allowing securities regulators an opportunity to continue to work together to address advances in technology and new trading strategies.