Tweet
It occurs to the SEC that flash traders may be doing it because looking at trading data before anyone else can see it may give them an advantage.
I'm so glad we are being looked out for properly.
http://www.bloomberg.com/apps/news?p...d=aX_gc6Uuba98
"SEC Proposes Ban on Allowing Stock Flash Orders (Update1)
Share | Email | Print | A A A
By Jesse Westbrook
Sept. 17 (Bloomberg) -- The U.S. Securities and Exchange Commission proposed banning flash orders after lawmakers said the practice may give hedge funds an advantage over other investors.
SEC commissioners unanimously voted today to seek public comment on a rule barring exchanges and trading platforms from giving clients access to information about stock orders a fraction of a second before the market. The proposal requires a second vote at a later public meeting to become binding.
“Investors that have access only to information displayed as public quotes may be harmed if market participants are able to flash orders and avoid the need to make the orders publicly available,” Chairman Mary Schapiro said.
Democratic Senators Charles Schumer and Ted Kaufman urged the commission to halt the practice, arguing frequent traders use technology to profit from access to information not available to retail investors. Direct Edge Holdings LLC has relied on flash orders to take market share from NYSE Euronext.
Nasdaq OMX Group Inc. and Bats Global Markets voluntarily dropped flash orders last month after the practice drew scrutiny from Congress and the SEC. NYSE Euronext, operator of the world’s largest exchange, is the only exchange that didn’t offer flash orders.
“The SEC has done what we asked for,” Schumer said in a statement today. “This proposal will once and for all get rid of flash trading, which, if left untouched, could seriously undermine the fairness and transparency of our markets.”
‘Inequity’
Schapiro asked her staff in August to draft rules that “eliminate the inequity” that flash orders cause, as part of a broader review of trading in dark pools, which are broker-owned markets that don’t display quotes to the public.
James Brigagliano, acting co-head of the SEC division that oversees stock exchanges, said today the agency is examining other topics related to “market structure,” including the amount of stock volume that occurs off exchanges and high- frequency trading, in which hedge funds and other Wall Street firms use advanced computers to buy and sell thousands of shares in fractions of seconds.
Flash orders, which make up a small percentage of high- speed trading and have drawn the most criticism, trace their roots as far back as 1978 to efforts by exchanges to electronically replicate how a trader might yell an order to floor brokers before entering it into the system that displays all bids and offers.
Markets have since evolved, with computer algorithms now buying and selling shares 1,000 times faster than the blink of an eye. So-called high-frequency trading strategies may now account for 70 percent of share volume in the U.S., according to Patrick O’Shaughnessy, an analyst at Raymond James & Associates.
To contact the reporter on this story: Jesse Westbrook in Washington at jwestbrook1@bloomberg.net.
Last Updated: September 17, 2009 19:36 EDT "
I'm so glad we are being looked out for properly.
http://www.bloomberg.com/apps/news?p...d=aX_gc6Uuba98
"SEC Proposes Ban on Allowing Stock Flash Orders (Update1)
Share | Email | Print | A A A
By Jesse Westbrook
Sept. 17 (Bloomberg) -- The U.S. Securities and Exchange Commission proposed banning flash orders after lawmakers said the practice may give hedge funds an advantage over other investors.
SEC commissioners unanimously voted today to seek public comment on a rule barring exchanges and trading platforms from giving clients access to information about stock orders a fraction of a second before the market. The proposal requires a second vote at a later public meeting to become binding.
“Investors that have access only to information displayed as public quotes may be harmed if market participants are able to flash orders and avoid the need to make the orders publicly available,” Chairman Mary Schapiro said.
Democratic Senators Charles Schumer and Ted Kaufman urged the commission to halt the practice, arguing frequent traders use technology to profit from access to information not available to retail investors. Direct Edge Holdings LLC has relied on flash orders to take market share from NYSE Euronext.
Nasdaq OMX Group Inc. and Bats Global Markets voluntarily dropped flash orders last month after the practice drew scrutiny from Congress and the SEC. NYSE Euronext, operator of the world’s largest exchange, is the only exchange that didn’t offer flash orders.
“The SEC has done what we asked for,” Schumer said in a statement today. “This proposal will once and for all get rid of flash trading, which, if left untouched, could seriously undermine the fairness and transparency of our markets.”
‘Inequity’
Schapiro asked her staff in August to draft rules that “eliminate the inequity” that flash orders cause, as part of a broader review of trading in dark pools, which are broker-owned markets that don’t display quotes to the public.
James Brigagliano, acting co-head of the SEC division that oversees stock exchanges, said today the agency is examining other topics related to “market structure,” including the amount of stock volume that occurs off exchanges and high- frequency trading, in which hedge funds and other Wall Street firms use advanced computers to buy and sell thousands of shares in fractions of seconds.
Flash orders, which make up a small percentage of high- speed trading and have drawn the most criticism, trace their roots as far back as 1978 to efforts by exchanges to electronically replicate how a trader might yell an order to floor brokers before entering it into the system that displays all bids and offers.
Markets have since evolved, with computer algorithms now buying and selling shares 1,000 times faster than the blink of an eye. So-called high-frequency trading strategies may now account for 70 percent of share volume in the U.S., according to Patrick O’Shaughnessy, an analyst at Raymond James & Associates.
To contact the reporter on this story: Jesse Westbrook in Washington at jwestbrook1@bloomberg.net.
Last Updated: September 17, 2009 19:36 EDT "
Comment