Algrotrading is scary and Consob runs for cover. In the 2013-2015 strategic plan, the Commission underlines that, "in relation to the issue of market abuse, the central risk area is linked to the strong development of new operating methods on the markets, such as automated trading and high-frequency trading (high-frequency trading)".
These are phenomena which, on the one hand, "make it difficult to identify possible phenomena of market abuse - continues Consob - and, on the other hand, generate the risk of unordered trading, in particular due to the possible inadequacy of tools for the ex ante and ex post management of low latency strategies by trading venues and market participants".
To deal with these problems, the Commission states that it intends to propose, "within the framework of Community legislation, rules which require trading venues to have software for the ex post reconstruction of the trading book, so as to be able to adequately carry out the detection of the phenomena of abuse and to allow the competent authorities a rapid enforcement action".
As for supervision in Italy, Consob's strategic objective is to "strengthen the initiatives aimed at raising the quality of the organizational requirements and control systems of trading venues and investment firms operating in a highly automated environment (algorithmic trading and HFT) , verifying and monitoring over time the observance of adequate levels of compliance with the ESMA guidelines".
