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$]
