SEC Seeks To Ban High-Frequency Trading

It is an obscure art of Wall Street, a technique that gives a scattering of traders an edge over everyone else and the Securities and Exchange Commission wants to stamp it out.  The SEC on Thursday proposed to ban what are known as flash orders, which use powerful computers to glimpse at investors’ orders. The practice is often associated with a controversial corner of finance called high-frequency trading, which has grown, largely hidden from view, into a potent force in the markets.  …..

SEC Chairwoman Mary Schapiro said Thursday that in proposing the ban, the commission was trying to balance the often competing interests of long-term investors and short-term traders. The proposal requires a second vote by the commission to become binding.  “Flash orders may create a two-tiered market by allowing only selected participants to access information about the best available prices for listed securities,” she said during a meeting in Washington. Other modern market practices, she said, are similarly opaque.   ……

“High-frequency trading has made the markets more efficient, and generally speaking, markets that are more efficient are better for all participants,” said Justin Schack, a vice president at Rosenblatt Securities.  Even so, Schack said he was pleased the SEC was moving to ban flash orders, which he said tended to “benefit everyone except for the customer.”  Article

Comment- DCL: While there can be little doubt that the SEC’s proposals are well justified, and late incoming, are we seeing here the beginning of regulation of the uses of computers and event processing?