Two stories this week demonstrated that Greece

isn't the only thing Europe has to disagree about.

Together they both help highlight the problem regulators have

worldwide with HFT. The first story,

target="_blank">by the FT's Jeremy Grant,

describes how Italy's Borsa Italiana is bowing to title="Consob"

href="http://www.consob.it/mainen/index.html?mode=gfx"

target="_blank">Consob pressure and introducing a

fee structure that will charge participants more depending upon

the number of orders they submit. This effectively introduces a

tax on the HFT community because their business model is

predicated on a much higher order to fill ratio. The rationale

for this is that HFT somehow distorts markets and so this is

needed in order to achieve "stability". And

yet, not so far away, the Swedish regulator claims that title="Sweden finds HFT effects limited"

href="http://jlne.ws/AiM6Vu" target="_blank">"the

negative effects related to high-frequency and algorithmic

trading are limited". Worse still is the

situation in Australia where the new ballooning regulation costs

are being divided up in accordance with the numbers of orders

submitted. Apparently this is not intended as a direct tax on HFT

but a way of reflecting the extra effort involved in supervising

these firms. The net effect, however, is just the same.

Part of the problem lies in coming up with a definition

of HFT that everyone agrees upon, but the real problem lies with

the regulators themselves. When they were busy introducing

multi-market structures, why didn't they think that

this would lead to a huge increase in HFT? Splitting liquidity

over multiple destinations and the subsequent introduction of

maker taker pricing provides the ideal breeding ground for

arbitrage. And, of course, exchanges around the world have been

busy building the fastest race tracks they can in order to

attract the same HFT players too.

Maybe it's

because HFT is such a nebulous concept that it becomes such an

easy scapegoat. Firms can always claim that any sanctions aren't

really directed at them but, just like Greece, I guess the debate

will go on forever.