ICMA responds to ESMA consultation paper on algo trading


12 March 2021 The ICMA algo taskforce (Taskforce) member response is based on consensus view and relates solely to bonds. The Taskforce represents buy-side and sell-side investment firms, trading venues and software and technology providers.

The motivation for regulating algo trading is the mitigation of risks such as market-wide disruption or destabilisation. However, unlike equity markets, the bond market use of technology often does not fit the execution algorithm definition and does not carry the same systemic risk or disruption potential. Even if the terminology of an ‘algorithm’ is used, it is often automations without the ability to generate new orders / child orders (parent orders sliced into smaller 'child' orders electronically through algorithms) or to trigger executions.
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