High-frequency traders in the European Union (EU) are set toface some of the toughest rules in the world, as legislators backedrules that they said would curb volatility and make marketssafer.

The limits include standards meant to keep the price incrementfor securities from being too small, mandatory tests of tradingalgorithms, and requirements that market makers provide liquidityfor a set number of hours each day. The curbs are part of revampedEU markets legislation approved by the European Parliament votingin Strasbourg, France.

The price increment rules and other measures requiring tradingto stop if “price volatility goes beyond a certain level” will slowdown high-frequency trading “to a more manageable pace,” MarkusFerber, the legislator who led the assembly's work on thestandards, said in an email before today's vote.

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