UPDATE 1-Deutsche Boerse sees no threat from high frequency trade debate

Tue Apr 29, 2014 9:57am EDT

Related Topics

* European regulation on HFT well ahead of U.S. rules

* Deutsche Boerse already fulfils German HFT rules

* Sees little impact of Europe transaction tax on group

* No plans to issue convertible bonds at moment (Adds CFO comment, background)

FRANKFURT, April 29 (Reuters) - Deutsche Boerse expects a renewed focus by regulators on high frequency trading (HFT) will have little effect on its business, the company's chief financial officer said on Tuesday.

"There will be further discussion on it but for our business we don't think we are negatively impacted," Gregor Pottmeyer told a conference call with analysts, a day after the German exchange operator released first quarter earnings that showed revenue rising.

HFT is a practice carried out by many hedge funds, banks and proprietary firms using sophisticated computer programs to send high volumes of orders at near light speed, executing short-term trades to make markets or capitalize on price imbalances. HFT makes up more than half of all U.S. trading volume.

Some U.S. regulators have said high frequency traders enjoy unfair technological advantages, with stock exchanges giving them early access to key data, and need to be curbed.

Regulators' focus on HFT has been piqued by Michael Lewis' new book "Flash Boys: A Wall Street Revolt," which argues that markets are rigged in favour of high-frequency traders, who use their speed to "legally front-run" other investors.

Pottmeyer played down the importance of the issue for Deutsche Boerse, pointing out that the U.S. equity market is much more fragmented than in Europe and that safety measures, such as volatility interruption, have existed in Europe for years.

"The regulation in Europe is really far ahead compared with the United States," Pottmeyer said, adding that Deutsche Boerse already fulfilled Germany's HFT requirements, which were approved last year.

"We already put many measures in place and feel we are fine with this development," he said.

Similarly, plans in Europe to introduce a tax on financial transactions would most likely affect equity transactions, which would not have a material impact on Deutsche Boerse, Pottmeyer added.

Earlier, Pottmeyer said Deutsche Boerse has no plans at this stage to issue convertible bonds, which can be transformed into equity capital, although it has asked its shareholders for permission to do so as a potential financing alternative.

Deutsche Boerse holds its annual meeting of shareholders on May 15. (Reporting by Jonathan Gould; editing by Thomas Atkins and William Hardy)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.