Chicago Fed Calls for Curbs on High-Frequency Trading

The Federal Reserve Bank of Chicago entered the debate over whether financial markets are fair, proposing limits on high-frequency trading firms and incentives to bring more buying and selling into public view.

Recommendations in a working paper published yesterday include breaking up the trading session into a series of half-second periods, a snail’s pace in an era of microsecond trading. The Fed’s John McPartland also suggested curbing hidden orders on public markets by mandating that they stay at the back of the queue, executed only after fully public trades at the same price are filled.