FCA views on increasing electronification of trading

Edwin Schooling Latter, Head of Markets Policy, FCA, delivered a speech on how the FCA views the increasing electronification of trading at the FIX 2016 EMEA Trading Conference.

In his speech, he pointed out that electronification has many advantages, but also poses risks and raises questions that need to be discussed such as:

  • Is electronification, or the algorithmic and high-frequency trading that can follow it, or an associated change in the type and nature of firms acting as market makers a contributory factor in price volatility and some of the flash price spikes that have been observed?
  • How could greater electronification be affecting market quality and resilience?

He further went into more detail on the question whether there is a link between electronification and volatility, but without giving a final verdict on the issue, urged for further careful study and monitoring.

Schooling Latter also discussed the role the design of market microstructure, and in particular the controls put in place by trading venues, can play in limiting vulnerability to price spikes, pointing to the changes MiFID II will bring.

The full speech can be found here.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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