HIGH-FREQUENCY TRADERS 'ARE BAD'
- By Pauline Skypala
High-frequency traders and commodity speculators are bad for markets, according to Finance Watch, which is backing a proposed clampdown on such market participants across Europe under the revised version of the Mifid directive.
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In a paper* due to be published this week, the Brussels-based public interest advocacy group will call on the European Union to maintain its tough stance on these activities, as well as on over-the-counter and "dark" trading in securities.
Thierry Philipponnat, secretary-general of Finance Watch, said financial markets should serve as the meeting place for suppliers and users of capital. The first Mifid directive had not achieved its objective of supplying a better meeting place, he argued, adding there was "an urgent need to redirect capital from short-term, speculative use to long-term investment in the productive economy".
The paper will argue that "the net effect of high frequency trading is to withdraw liquidity from the market" and that use of commodity index products leads to higher prices, particularly for agricultural commodities.
*Investing not betting: making financial markets serve society
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