SEC Begins Probe Of Flash Trading

Tyler Durden's picture

*SEC IS EXAMINING FLASH ORDERS TO ENSURE FAIR ACCESS TO DATA 2009-07-30 19:04:18.188 GMT

Next up: Dark Pools (hint, hint, Mary)

Update: From Bloomberg

July 30 (Bloomberg) -- The U.S. Securities and Exchange
Commission will review so-called flash orders used by four
equity markets, NYSE Euronext Chief Executive Officer Duncan
Niederauer
said.

Charles Schumer, the third-ranking Democrat in the U.S.
Senate, told the SEC to review flash orders in a July 24 letter.
Regulators told NYSE officials they will examine them, and based
on those discussions it appears unlikely the SEC will impose
curbs on other forms of high-speed trading, Niederauer said
today in a conference call with analysts to discuss the New
York-based company’s second-quarter results.

“I don’t think there is any fear of them doing something
that would severely damage the displayed liquidity on U.S.
equity markets,” he said. “High-frequency trading is actually
the most consistent source of liquidity.”[TD: Time for one more of those "The Y in the NYSE stands for Trust" ads]

John Nester, a spokesman for the SEC, didn’t return a
telephone call seeking comment. Last month, SEC Chairman Mary
Schapiro
said the agency is concerned that electronic
indications of bids and offers are being disseminated to a
select group of brokerages.

NYSE’s competitors -- Nasdaq OMX Group Inc., Bats Global
Markets, Direct Edge Holdings LLC and the CBOE Stock Exchange --
give information to their clients about orders for a fraction of
a second before the trades are routed to rival platforms. NYSE
Euronext
, the world’s largest owner of stock exchanges, told the
SEC in May that these flash orders result in most investors
getting worse prices.