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Regulation

∞structural

The rulebook that constrains the microstructure: Reg NMS, MiFID II, market-abuse regimes and circuit breakers. The rules made the modern HFT landscape as much as the technology did.

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What's in this topic

4 pages, each linking down to the ideas inside it.

Reg NMS01
Regulation National Market System (SEC 2005). Its Order Protection Rule requires execution at the best displayed price across all venues, and by linking fragmented venues into one grid, it created the conditions for cross-venue latency arbitrage.
∞structural
MiFID II02
The EU framework in force since 2018. For HFT it adds algorithm registration and testing, mandatory pre-trade risk controls and kill switches, order-to-trade limits, market-maker agreements, and microsecond clock sync.
∞structural
Market-abuse regimes03
The laws that make manipulation illegal: the EU MAR (2014), Dodd-Frank §747, and the enforcement that follows. What is lawful is the technology; what is not is manipulative intent and conduct.
∞structural
Circuit breakers04
Pre-set rules that pause trading when prices move too far too fast. US equities use single-stock LULD bands plus market-wide breakers; they were tightened after the 2010 Flash Crash. Most venues, including crypto, now run an equivalent.
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Where this fits

↔ Across · composes with Market microstructure ↔ Across · composes with Market manipulation ↔ Across · composes with Risk management → Apply · makes money in Equities & futures ⤓ Build / Buy · tool needed Datasets & tools

Questions this topic answers

Is high-frequency trading legal?
Yes. HFT is legal and a large share of regulated-venue volume. What is illegal is manipulation (spoofing, layering, momentum ignition, quote stuffing) prohibited under the US Dodd-Frank Act §747, the EU Market Abuse Regulation (MAR, 2014) and MiFID II (2018). The technology is lawful; specific manipulative intent and conduct are not.
Who regulates high-frequency trading?
There is no single "HFT regulator"; it is governed by each market’s securities and derivatives authorities. In the US that is the SEC (equities, Reg NMS) and CFTC (futures), with the DOJ prosecuting manipulation. In the EU, ESMA and national regulators enforce MiFID II and MAR; in the UK, the FCA. Crypto and prediction-market oversight in 2026 is still fragmented and venue-dependent.