of bank business models, cost inefficiencies, overcapacity and still - large stocks of npls for parts of the euro area banking sector. first and foremost, it is up to the banks themselves to undertake the needed adjustment. but an effective reduction of npls will require action from all stakeholders, and will need to include legal and institutional reforms. in particular, active policies are needed to improve the efficiency of judicial systems, increase access to collateral, introduce swift out - of - court procedures and create liquid markets for distressed debt. last month the ecb published its final guidance to banks on npls. furthermore, it is crucial to complete the global regulatory reform agenda as soon as possible in order to significantly strengthen the regulatory framework for banks and ensure a period of regulatory stability and certainty for market participants. while the economic recovery in the euro area is firming, the reform process needs to be reinvigorated to transform the cyclical pick - up into stronger and persistent long - term growth. to that end, structural reforms have to be implemented much more decisively, including reforms addressing key institutional weaknesses and improving private debt workout mechanisms which are necessary to improve the investment environment. in many cases, these reforms entail fairly low short - term economic cost. given that national reform efforts remain limited in euro area countries, it is also important to foster the use of existing tools, most notably a full and consistent application of the eu ’ s macroeconomic imbalance procedure. likewise, full and consistent implementation of the stability and growth pact remains crucial to ensure confidence in the eu ’ s fiscal framework and to safeguard public debt sustainability. in the current environment of a firming economic recovery, a broadly neutral euro area fiscal stance strikes an appropriate balance between aggregate stabilisation and sustainability needs. however, the contribution of individual member states to the area - wide stance is sub - optimal. some member states need to take additional measures to ensure compliance with the fiscal rules while others have scope to use available fiscal space. all euro area countries should strive for a more growth - friendly composition of fiscal policies. more broadly, a stronger and more complete economic and monetary union ( emu ) is essential to ensuring the future resilience of the euro area economy. the european commission started a general reflection on the future of the eu by publishing a white paper last month, which will be followed by a paper on emu in may 2017. we need to make progress on completing the banking union by moving forwards in

trading can then be divided into manual, where instructions are executed by humans on an electronic trading platform, and automated, where instructions are executed by computer algorithms and there is little or no human intervention. the split here is about fifty - fifty. mind you, the landscape is changing at a high frequency! in the fx market, segmenting types of traders is difficult ; there is inevitably a lot of crossover in styles and blurring of boundaries. so for the purposes of our study, we split algorithmic ( algo ) trading into two categories : algo execution and algo decision - making. the former is when a trader uses an algo to execute an order, often used for large orders. the latter is where a model is used to initiate a trade based on parameters such as order book imbalance, momentum, correlations and systematic responses to economic news. it is in the latter camp that hft is located. hft firms generate their revenues from doing a large number of small - size, small - profit trades. they operate with low latency and their risk - holding period is very short, frequently less than one second. as speed is of the essence, indeed the defining characteristic of hft, co - location is important, that is locating the server that sends the order message as close as possible to the servers of the trading venue. however, our discussion with a number of participants in the market suggested that diminishing returns to speed have well and truly set in, such that the value of future gains may not be worth the investment cost. indeed, there was a general sense that hft was reaching a mature phase, where greater returns were more likely to be had from moving into new market segments rather than spending more on enhancing speed. 2 hft participants in fx tend to be located in three cities : chicago, new york and london, although the physical location of the server is more important than the physical location of the office. the bulk of trading volume appears to be accounted for by several large firms. most of the activity occurs on the inter - dealer electronic broking platforms ( reuters and ebs ) and the multi - bank electronic communication networks ( ecns, such as currenex, hotspot and fxall ). the various platforms have differing technologies, trading rules and trading parameters. for example, there are varying restrictions on quote life and fill ratios. this assumes, of course, that technology is not developed to let one trade faster than the speed of