July 27 (Bloomberg) -- High-speed trading in the U.S. stock market may face its biggest threat after Senator Charles Schumer proposed prohibiting so-called flash orders.
Schumer, the third-ranking Senate Democrat, urged the Securities and Exchange Commission to ban the practice in which some equity exchanges hold orders to buy and sell shares for a split second before publishing them on competing platforms. Nasdaq OMX Group Inc., Bats Global Markets and Direct Edge Holdings LLC, which handle more than two-thirds of the shares traded in the U.S., offer flash orders to their customers.
Schumerâs July 24 letter raises the stakes in a debate over whether computer-driven trading by hedge funds and Wall Street firms gives them an unfair advantage over other investors. While flash trades make up less than 4 percent of U.S. stock volume, theyâve drawn criticism from the Securities Industry and Financial Markets Association, Wall Streetâs main lobbying group, and New York-based NYSE Euronext.
âItâs an arms race driven by technology,â said Sang Lee, managing partner at financial-services consultant Aite Group LLC in Boston. âSomeone like Chuck Schumer getting involved in the process will create a deeper conversation about where the whole market is headed.â
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZwoslIGa5JQ
Schumer, the third-ranking Senate Democrat, urged the Securities and Exchange Commission to ban the practice in which some equity exchanges hold orders to buy and sell shares for a split second before publishing them on competing platforms. Nasdaq OMX Group Inc., Bats Global Markets and Direct Edge Holdings LLC, which handle more than two-thirds of the shares traded in the U.S., offer flash orders to their customers.
Schumerâs July 24 letter raises the stakes in a debate over whether computer-driven trading by hedge funds and Wall Street firms gives them an unfair advantage over other investors. While flash trades make up less than 4 percent of U.S. stock volume, theyâve drawn criticism from the Securities Industry and Financial Markets Association, Wall Streetâs main lobbying group, and New York-based NYSE Euronext.
âItâs an arms race driven by technology,â said Sang Lee, managing partner at financial-services consultant Aite Group LLC in Boston. âSomeone like Chuck Schumer getting involved in the process will create a deeper conversation about where the whole market is headed.â
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZwoslIGa5JQ
