Deutsche Boerse AG (DB1)’s Eurex derivatives market plans financial penalties for certain high-speed trading practices, a shift that comes amid German and European Union attempts to curb computerized transactions.
Eurex, based in Frankfurt, told members in a statement that on Dec. 1 it will start charging those that submit an unusually high number of orders in relation to consummated transactions. High-speed traders often flood markets with bids and offers in an attempt to find parties to do business with, tasking the infrastructure of exchanges and brokerages. Eurex also said it will penalize firms that exceed a daily maximum of transactions.
Germany is moving to implement stricter rules on high-frequency trading ahead of EU rules that will also step up oversight. Firms that use computers to buy and sell securities in milliseconds have attracted the attention of regulators since the May 2010 U.S. stock market plunge known as the flash crash, which sent the Dow Jones Industrial Average to an almost 1,000 point loss in minutes.
German Chancellor Angela Merkel has been under pressure from the opposition Social Democratic Party to impose stricter rules on the finance industry. Her party said today that it will hold exploratory talks with the Social Democrats this week as each side dug in for the prospect of months of negotiations to form a government after the Sept. 22 election.
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