Via Advanced Trading :

As regulators in the United States and Europe weigh the merits of new regulations to govern high-frequency trading, emerging markets have been methodically paving the way for the practice to expand within their borders.

In an interview with the BBC, Progress Software’s chief technology officer John Bates says said the practice of rapid-fire trading is quickly expanding in the so-called BRIC nations - Brazil, Russia, India and China.

From BBC:

We’ve seen it grow very quickly in Brazil. It’s done what happened in London and New York much more quickly. Now we’re seeing the same trend in India and China and even, embryonically, in Russia." According to Dr. Bates, in the past two to three years, Brazil has already run through a cycle of development that took far longer in London and New York, with algorithm-based trading now available in equities, futures and foreign exchange markets. Brazil’s Bovespa stock exchange has invested in new technology, boosting the proportion of algorithm-based equity trades from 4% to 12% in the past year. “The adaptation is faster and they can leapfrog the mistakes that have been made in other places,” he says.

Brazil has cleared regulatory hurdles of its own to spur the growth of its marketplace. In December it lifted a financial transaction tax for foreign investors, a move that will undoubtedly create new opportunities for Dodd-Frank and Basel III escapees. And the recent moves by Bovespa - the nation’s largest exchange - are likely to bring a dramatic lift to trading volumes and the level of liquidity it handles over the foreseeable future.

Meanwhile in India, the BBC noted that nearly a quarter of all trading is now done using algorithms, a number that’s virtually assured of an exponential jump as well. The Bombay Stock Exchange, a $1.5 trillion marketplace, said it expects such trading to double over the next three years, which would put that nation on par with Europe and the U.S.

Now emerging markets aren’t without their own set of serious challenges.But they’ve clearly caught HFT fever and the practice is poised for sharp growth this year, even as the old world wrestles with how to govern it.

Sometimes I get skeptical about such articles that say HFT is going to happen soon in India. These articles make it sound as though things are all rosy and HFT is just on the corner. Well, Just because 25% of the trading volume in India happens electronically, it does not mean they are necessarily HFT orders. They might just be order routing algos. Since the stock exchanges(NSE + BSE)  are tight lipped about these orders and the actual numbers, one can only speculate  here. I think that they are nothing but the result of simple order routing algos. I think they are not even the result of smart order routing algos but plain vanilla order routing algos. At least from whatever I have read about HFT, order routing algos do no qualify as HFT. Would be pleasantly surprised if my speculation is proved wrong and one of the exchanges actually gives out some metrics and numbers that indicate that majority of orders are HFT in nature.

One boost to HFT could be a drastic reduction in Securities Transaction Tax. Budget is just a few weeks away and  it will be interesting to see whether govt. does something about it.