You certainly have a point there, and one governments often don't even bother to consider.
Respectfully, though, I'm not sure having the ability to set a hard limit price for an order throughout the entire auction process quite fits into that category. Here's an interesting research report co-written by the ex-CEO and co-founder of OANDA FX: "High-Frequency Trading in FX Markets (PDF)".
On the topic of "extreme regulation", from the above research report, this is one of my favorite examples (besides some of the nonsensical short-selling bans regulators have also tried to implement):
The most extreme form of regulation is the so-called Tobin Tax, a small
fee on transactions of financial securities. France is the first European
country to impose such a transaction tax, which amounts to
0.2%, to be paid on all transactions by companies headquartered in
France. Becchetti et al (2013) analysed the impact of the introduction
of the French Tobin tax on volume, liquidity and volatility of affected
stocks and documented that the tax has a significant impact in terms
of reduction in transaction volumes and intraday volatility.
On a side note, I also find it "humorous" that the "0.2% Tobin Tax Rate" described above is approximately what most crypto exchanges outrageously charge per side of their client's transactions. And somehow, it's still not enough to keep many of them solvent!
Haha, that last sentence is pretty crazy. And there should be a tobin tax on HFT across the board. It has nearly taken out all human trading and pro day traders are a dying breed.