High Frequency Trading and Circuit Breakers in the EU

This chapter reviews the fundamental workings of the EU regulatory framework and its implications for high frequency trading (HFT) and the latest findings on the market realities in the EU. Over the last decade, securities trading landscapes have undergone significant change, with the emergence of HFT being one of the most important developments in this context. At the same time, the EU has made landmark legislative advances with the aim of increasing investor protection, market order, and financial stability, and of containing risks in those areas. As the new MiFID2 legal framework takes effect, a wealth of new data and evidence will become available in coming years that will improve understanding of HFT patterns, the effectiveness of circuit breakers, and their optimal calibration.