An Anti-HFT Success Story: European Exchange Bans Frontrunning Algos, Grows Dramatically

If anyone is still confused why the most predatory, parasitic, and in many case criminal, of HFT actors are so vehemently opposed to IEX's HFT-limiting exchange application, here is the reason. 

According to Bloomberg, Europe's Aquis Exchange has doubled its share of public European stock trading since Feb. 8, when it banned what it considers a problematic high-frequency-trading strategy. Aquis says it doesn’t have a beef with HFT firms, it just wants to limit proprietary traders to passively providing price quotes. In other words, it wants to ban HFT firms which are parasitic orderflow frontrunners not market makers, and take zero risk which is about 99% of them. 

Bloomberg also notes that one firm that is still permitted on Aquis is HFT powerhouse Virtu: “We have the same goal as the end investor - we both want to minimize market impact,” said Doug Cifu, the chief executive of Virtu Financial Inc., an electronic trading company that’s providing more liquidity on Aquis. And why shouldn't it - now that it has enough scale it can merely step back and watch as the frontrunning HFT strategies cannibalize each other.

Meanwhile investors, all of whom have by now learned how HFTs manipulate and rig markets, will run away from any venue that still permits HFTs, and go to alternatives such as Aquis and, if its application is granted, IEX (which it won't be because NY Fed's favorite hedge fund Citadel is vocally opposed to IEX which means so is the SEC). This can be seen in the chart showing Aquis'share of European stock trading below.