Aug. 12 (Bloomberg) -- The May 6 crash shows how the fragmentation of U.S. stock trading across 50 venues dominated by computerized traders is hurting investors, executives from Invesco Ltd. and TD Ameritrade Holding Corp. said.
Regulations for market makers should be improved and better coordination among exchanges mandated, said Kevin Cronin, director of global equity trading at Invesco, and Chris Nagy, managing director of order routing sales and strategy at TD Ameritrade. They spoke at a meeting of the Commodity Futures Trading Commission and Securities and Exchange Commission.
U.S. regulators are exploring ways to avoid a repeat of the May 6 selloff, which erased $862 billion in equity value in about 20 minutes before the market rebounded. Cronin and Nagy said the plunge highlighted a deteriorating environment for investors where efforts to increase competition have left traditional buyers and sellers more vulnerable to predatory tactics by high-frequency traders.
âWe have no incentives to post large amounts of liquidity,â Cronin, whose firm oversees $560 billion, said at the meeting in Washington yesterday. âWeâre not sure what the value of a quote is.â
Mutual funds and asset managers often avoid exchanges because of concerns about the strategies of some high-frequency trading firms, who may submit and alter quotations thousands of times a second, Cronin said. Atlanta-based Invesco believes some of those strategies may include manipulative activity, he said.
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