Central Banks

Thursday, September 13, 2012 - 07:34

ECB's Nowotny Wants Ban On High-Frequency Trading


VIENNA (MNI) - High-frequency trading simply "should be forbidden" since there is no evidence that it provides "any added value" to the real economy, ECB Governing Council member Ewald Nowotny said Thursday.

Speaking at a conference on supervision and regulation, Nowotny argued that, "simple but tough bans might prove more effective than trying to regulate certain things." He added: "One case in point is high-frequency trading, which evidentially does not have any added macroeconomic value."

Therefore, "there is nothing to regulate there; it simply has to be forbidden," Nowotny, who heads the Austrian National Bank, argued.

He added that "this is also true for certain so-called 'financial innovations,'" though he did not specify which ones.

"As long as you are trying to regulate something, you give people the possibility to circumvent it, and they will find a way to do so," Nowotny observed. In a similar vein, he welcomed the decision of the Austrian supervisory authority, FMA, to ban certain foreign exchange-denominated loans to retail customers.

Nowotny said that in the past there had been a "phase where deregulation went too far." That "was one of the reasons - though not the only one - for the financial crisis," he added.

"But now we are reaching the limits of regulation regarding staff and financial resources, and we have to consider whether we go on like we have done so far," he said.

[TOPICS: M$X$$$,MGX$$$,M$$EC$]

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