The Problem With Enforcing Regulations

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September, 2012

ECB Governing Council member Nowotny wants a ban on high frequency trading.  According to MNI , Nowotny said: “One case in point is high-frequency trading, which evidentially does not have any added macroeconomic value… there is nothing to regulate there; it simply has to be forbidden.”   Nowotny also said “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.”

This exact point was recently discussed in a paper titled “Market Making Obligations and

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