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How America's high-speed trading shows other countries what not to do

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NASDAQ times square (STOCK)
NASDAQ times square (STOCK)

According to a new report from The New York Times, the US is increasingly serving as an example to the rest of the world of how not to handle the growing phenomenon of high-frequency trading (HFT), where equities and other assets are bought and sold in miniscule fractions of a second. In the wake of the 2010 Flash Crash and the more recent Knight Capital fiasco, in which a technical error lost the New Jersey-based trading firm $440 million, countries including Canada, Germany, and Australia have sought to implement regulation making the practice less attractive.

One proposal currently under discussion by the European Parliament would require traders to hold their prices for at least half a second, which, as The New York Times points out, would be "an eternity for firms that are used to submitting and withdrawing quotes in millionths of a second." Head over to the original article for the full story — for some idea of how popular HFT has become in recent years, check out this animated GIF produced by market research firm Nanex.