One of the main goals of the MIFID2/MIFIR regulatory package was to increase control and scrutiny over high-frequency trading, in an attempt to decrease the risk of:
(Recall that MIFID2 defines high-frequency trading as a subset of algorithmic trading - for more information, please check What is high-frequency trading?)
- Disorderly trading (specially flash crashes, but also cases of abnormally high volatility);
- Trading systems' overloads;
- High-frequency market manipulation (specially spoofing/layering).
(Recall that MIFID2 defines high-frequency trading as a subset of algorithmic trading - for more information, please check What is high-frequency trading?)
Even though I have not seen any post-MIFID2/MIFIR impact study on these topics, I think it is fair to say that these regulations allowed, at least up to a point, for more oversight, transparency, (algorithm's and algorithm trading system's) resilience and liquidity.
However, I think it is also fair to say that these changes, albeit relevant, were not radical. Indeed, many expected MIFID2/MIFIR to have bolder measures, such that would substantially limit HFTA activity... (I am not saying that I would be in favor of such measures!...)
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