Senator Kaufman Approves SEC Proposal Calling For Elimination Of Naked Access

Yet as even Senator Kaufman, the last person left in D.C. who is fighting the uphill battle for an efficient market, and not a puppet proxy of various HFT interests, acknowledges, there is still a lot to be done.

Kaufman Applauds SEC’s ‘Concept Release’ on High Frequency Trading and Proposed Rule to Ban Naked Access

Reiterates need for rule requiring disclosure of high frequency trading data and independent empirical analyses to measure impact of market developments on long-term investors

WASHINGTON, D.C. – Senator Ted Kaufman (D-DE) on Wednesday applauded the Securities and Exchange Commission for its rule proposal that would eliminate so-called ‘naked access,’ which allows traders to deal directly with exchanges without the pre-trade financial and risk checks applicable to and monitored by broker-dealers. Studies estimate such trading represents as much as 38 percent of daily trading volume. 

The Commission also voted to publish a so-called ‘concept release’ on a host of equity market-structure issues, including high frequency trading. Kaufman originally called for a comprehensive review of this kind in an Aug. 24 letter to SEC Chairman Mary Schapiro. 

“I am very pleased that the Commission is ready to ask serious questions and drill down beneath the standard-issue ‘provides liquidity’ defense of high frequency trading.  The SEC needs to understand and control technology and its benefits, not permit technology to operate without regulatory understanding or access to needed data, and in doing so outrace the regulators’ ability to ensure market fairness for long-term investors. I am hopeful that a variety of independent parties will provide the Commission with the empirical studies needed to assess the price impacts of these trades on long term investors, though I worry that the data needed to undertake those studies is still not available,” Kaufman said.

The SEC’s actions today follow a Nov. 20 letter Kaufman sent to Chairman Schapiro calling on the SEC to address risks created by naked access and take steps to increase transparency surrounding high frequency trading.  In her Dec. 3 response, Chairman Schapiro also promised that the Commission would use its “large trader” authority to implement stricter reporting requirements for high volume traders.
 
Said Kaufman:  “A proposed rule on tagging and reporting of high frequency trading is a critical element of ensuring the integrity of our financial markets. I look forward to Chairman Schapiro expediting that process.”  Kaufman is concerned that with 70 percent of the daily volume now represented by high frequency trading, most market participants profit directly or indirectly from that volume, and so are conflicted in critiquing it effectively.  Many who may be disadvantaged by high frequency trading neither have the empirical data nor the analytical capability to measure the price impacts high frequency trading may cause them to suffer.

Comments

[10044]

Is this a charade or is it for real? Does this mean dow 4000??

[ChickenTeriyakiBoy]

I have said this before: Kaufman is, unfortunately, a seat-warmer for Beau Biden, Delaware's ABSENT, opportunist "Attorney General". I'm not an ideological animal--aligned with neither major party--but for the love of the little baby Jesus please send some money to Mike Castle in order to circumvent this egregious case of nepotism. Castle carries the torch for the dying breed of reasonable Republicans

[Anonymous]

Not to criticize, but isn't Beau Biden in Iraq or Afghanistan---or somewhere overseas?

[Anonymous]

i think its more a charade 10044

[TimeToChange]

It's a scandal the SEC doesn't calculate and distribute the most basic statistics about the markets it regulates - effective and realized spreads, for example.  As far as I can tell, it doesn't do much economic analysis at all, and for an agency that pretends to regulate vast sectors of our economic life that is nothing short of astounding.  The SEC often says it doesn't have the resources it needs - despite a tripling of its budget since 2000, and a proposed doubling again in the next few years, for a net swing of 6X from 2000 to 2013.  What does it need to be able to collect and disseminate the most basic metrics of our capital markets?  Why on earth do we have to wait for "a variety of independent parties" (as Kaufman hopes) to do the most basic data analysis for a billion-dollar-a-year agency?  Remarkable. 

[loup garou]

Uh-huh…

You mean the boss of one of your pen pals -- “the last person left in D.C. who is fighting the uphill battle for an efficient market, and not a puppet proxy of various HFT interests” -- says he approves of it.

Now he can go back to ramrodding the healthcare monstrosity down our throats, pushing for other economy-killers like cap and trade, bailouts, nationalizations, and other massive tax and regulatory increases…

So that , if the SEC eventually follows through on this and many other issues, we can for the first time ever (supposedly) have an “efficient” market -- at Dow 1,000; with our individual liberties diminished; our nation bankrupt; unemployment in the stratosphere; and Barney Frank running the Federal Reserve.  Yes, how wonderful.
(Of course, despite the fact that the healthcare issue involves mega-trillions of dollars -- not to mention life and death-- it rates zero in the priority department of a “financial” website.)

Sorry, kid. Ain’t buyin’ it.

Can you spell “shill”?