France's stock market regulator imposed fines of 5 million euros ($5.4 million) each on a US trading firm and the Paris stock exchange over the controversial practice of high frequency trading.

The Financial Markets Authority (AMF) said its enforcement committee had imposed the penalty on "Virtu Financial Europe for market manipulation and ignoring Euronext market rules" while handing "a penalty in the same amount to Euronext Paris for failing to meet its obligation to operate with neutrality and impartiality..."

The fine against Euronext Paris was higher than the 4 million euros sought by the AMF's own sanctions commission, while that against Virtu, a specialist in high frequency trading, was unchanged.

Euronext quickly announced it intends to appeal.

"The AMF Enforcement Committee’s decision is particularly open to dispute, totally disproportionate and completely anachronistic," chief executive Stephane Boujnah said in a statement.

High frequency trading is the use of powerful supercomputers and complex mathematical algorithms to take advantage of minute price differentials in markets by rapidly placing thousands of trades faster than competitors.

This magnifies the risk of a so-called flash crash, when the price of a certain stock or even the market can plunge spectacularly, sometimes without apparent reason.

While there are no official figures, sector experts estimate high frequency trading accounts 30 to 40 percent of transactions in Europe and between 50 and 60 percent in United States.

The AMF took Virtu to task for flooding markets with orders, most of which were then cancelled within a second.

While the AMF emphasised that neither the company's "strategy in itself nor its status as a high frequency trader were in question" it said the flood of orders "gave, or were likely to have given, false or misleading indications as to the supply and demand for those financial instruments, constituting a market manipulation..."

Meanwhile the regulator took Euronext Paris to task for giving Virtu alone an exemption to the ratio of cancelled orders without notifying other market participants, thus not operating "with neutrality and impartiality, in accordance with market integrity".